Would it? This was possible to do with the old version of Plus. The point of that was also profitability. If it was profitable to do it then, why wouldn’t it be profitable to do it now, sans the current market climate. In which case, will it improve as the market does?
The interest isn’t a contention point for me, but I fully understand why it is for others, especially compared to the old plus.
But that would make nearly 0 sense for Monzo to do.
It is a shame Monzo weren’t able to offer just a little more than Marcus, but I guess it is hoping people don’t fully use the interest allowance
Interest rates are now lower (BOE rate). Which affects the cost of banks paying interest.
I suspect that’s why it’s so low, and why I hope it may improve over time, without impacting Monzo’s bottom line.
Then why offer that possibility with the old version? 
No bank ever pays more interest than it feels it needs to. It’s always a balance based on the overall funding costs that a bank has an how much they are aiming to attract; it’s all modelled and various approaches would have been reviewed my Monzo before going down this route.
Look at all the big UK banks - they all are paying 0.10% or similar right now, as essentially their don’t want extra money parked with them. But many consumers still prefer to park deposits with the biggest banks as there is a feeling of safety and security that some people feel regardless of the FSCS compensation scheme.
The banks which have the best interest rates are challenger banks who want to attract Money into the accounts.
Monzo is a challenger bank but they do not have a big loan book right now which will also impact how much deposits they want to get in.
Monzo’s comparators for the Plus account would not have been interest rates in savings accounts but interest rates on current accounts. There are not many current accounts that offer interest and of those that do Monzo’s is not the best but not the worst.
Plus accounts have been actively mentioned in Monzo’s strategy as one of the revenue streams that help them get to profitability - alongside growing the loan book and interchange income amongst other things.
Ultimately Monzo will have modelled an interchange level that they think will work best for the product at this time given various factors. Of course consumers always want a better rate though and Monzo have calculated that this is a level which will work for a reasonable number of people to make it worthwhile.
Did I read somewhere that debit interest on arranged overdrafts would also be reduced to 1%. Seem to think I did… but now can’t find the reference?
To be honest I’m not overly fussed either way - I find all the interest deals available mean if you’re aiming to get the most value you have to be moving money through loads of bank accounts each month.
£5k in bank 1, £2k here, £1k somewhere else with a minimum pay in of £2k… etc etc.
While it may not be the most profitable for me, I prefer to have a view of the majority of my stuff in one place.
£20 a year is nice. But it’s also negligible in the grand scheme. And the same applies across the board really for all the other bank accounts with the same kind of deal
(For me, at least)
The reality is that Monzo is going down the path of a different business model compared to most banks. As other commentators have said in the past week it’s more like a SAAS monthly fee which has been more a technology rather than banking approach.
I do think some banks in the best had different interest rates for their upgraded account - such as HSBC Advance - but going back a few years this was in a period where interest rates were a lot higher. In the current interest environment it’s harder to make comparisons.
Interest rates have been pants for the better part of this century, so just how far back is a few years? 
I recall a time when my Abbey National bonds dropped to 4% and that I believe was considered to a low rate at the time. But I’m talking very early 2000s. Ever since I’ve been old enough to open a bank account, I’ve not seen a rate higher than 2% on instant access or free current accounts.
Not all. Santander offer 1% till August, then 0.6% for a £5 pm fee, or there’s good old TSB offering 1.5% on balances up to £1,500 with no fee.
On current accounts. On savings accounts they don’t offer that.
Not sure using a failed version of something as the argument is a good idea.
I was under the impression it failed due to poor user feedback and poor uptake and not because the offering made 0 sense or wasn’t potentially profitable.
I was under the impression that the exact reason was never given, please correct me if you have some evidence.
I don’t buy this theory. Most of what Monzo has released is very basic (open banking integrations with no attempt at data analysis, virtual cards with no spending caps, a multiplier for round ups, custom categories). The fact that it’s been bundled with a holographic card, interest, offers, a free cash withdrawal, etc is because Monzo are well aware that they aren’t in a position to sell the software as a stand alone product.
For comparison, £60/year would buy you Microsoft Office 365.
Ok, how about Marcus? I pay £0 and they give me 1.05% in interest.
The whole idea of paying for interest is a bit messed up… the only reason it appears to happen is because of other, hidden factors (like other benefits being bundled in the price, or the bank having other reasons to want you to keep your money in their account)
I generally have similar thinking when it comes to in-credit interest as a perk of fee-bearing accounts at other banks.
But in the case of Monzo Plus my thinking is different. I think the interaction with pots is important/interesting because they aren’t simply savings accounts.
With free Monzo even though I would like to use regular pots for budgeting purposes I don’t currently use them because they bear no interest. But with Monzo Plus and its reasonable interest rate regular pots become something I would use. So for me an attraction wouldn’t be interest in itself, it would be that regular Monzo pots would become something I’d start using for budgeting if I decided to go for Monzo Plus.
Monzo, when monzo premium comes out maybe you could increase the interest rate
Monzo Plus: 1% on 2000
Monzo Premium: 2% on 2000 or maybe 1% on 5000/10000 ?
Offsetting the cost of Plus with savings interest doesn’t come into my thinking at all. Plus is either worth £5/month for the other features or its not. But for me personally one of the other features of Plus is pots for budgeting - because I wouldn’t use pots for budgeting if the interest was not available.
So the existence of the interest leads to an indirect perk for me. Even though I can get just as much interest elsewhere I’d rather divvy my short term savings and budgeted funds into pots instead of a single savings account.