Monzo in a positive interest rate world (Bank of England rate rises)


(james_e_bell) #1

Apologies if this has been answered but hadn’t seen it before.

I know that Monzo does not plan to pay interest on its current account (which has been discussed many many times). As a customer, I feel that Monzo’s value far outweighs that of other accounts that do pay interest, partly because at the moment the base rate is so low and most current accounts on the market have negligible interest making Monzo’s experience benefits worth the trade.

My question is whether Monzo has given any indication as to what will happen in the future if/when bank of england base rate rises or returns to ‘pre-crisis normal’ (as an example base rate was 5.75% prior to the crash).

Using Monzo when other accounts offer 1% is an easy tradeoff to make. If the others get to 5% I wonder whether people might need to make a tougher choice


(Geoff Pascoe) #2

Yeah, for this reason I don’t think I’ll ever keep a lot of money in my Monzo account. If I continue to use it, it will be in a manner similar to the prepaid card - top up small amounts as I need, and keep most of my money in another current account that pays interest, with salary and direct debits etc pointed to the other account. This works for me, but presents a couple of problems for Monzo: using the account in this manner is likely to be less profitable for them, and I suspect most people don’t want to maintain multiple accounts, so many won’t bother.


(James Nicholson) #3

This fits with what we’d like to build: we want Monzo to be your financial control centre.

If you’re keeping a large balance in your Monzo current account then we should tell you, and with one button press, let you open a savings account / ISA / etc. with another company that pays you interest (perhaps with Nutmeg, or a P2P lender, or another bank).

Then we should give you the power to automate it: you might have a rule that says “at the end of every month, if I have more than £500 left in my Monzo account, move the remainder to the following places…”.

We want to make the best bank in the world for our customers, and that includes helping you save and earn interest if you want to :slight_smile:


Our Plans to Close the Monzo Prepaid Cards
(james_e_bell) #4

Great response thanks James - I was wondering if you had also considered that automation rule at the beginning of the month rather than the end?

Basically my current behaviour with my money is actually it is 100% allocated the day it is paid in - my discretionary money goes to Monzo which is my ‘money for the month’, my bills + mortgage go to a joint current account which has DD off it (so i never see this / it doesnt complicate my understanding of my discretionary money), my remaining money goes either to instant access savings (incase I have a bad month and need to draw more back) and to more permanent savings (nutmeg)

Basically this way I can see how much money i have the entire month and optimise from the beginning rather than than at the end


#5

Is that not the usual thing? Back when we had money (we bought a house since) my wife and I had six accounts between ourselves, including one Help to buy ISA each, and multiple current accounts which offered “high” interest rates (but only on balances up to a few thousand quid) and/or cashback. Using some well timed standing orders I’d send about £1000 in circles around those accounts to fulfill the minimum pay-ins, plus £200 per month into the ISAs. Between us we earned roughly 5% interest and cashback p.a. on our balance over the last few years.

There is no way a single bank can provide all the benefits that a combination of them can offer.


(James Nicholson) #6

Thanks! Absolutely – this is just illustrative, @hugo has much grander plans in his head right now :wink:


(system) #7

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