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Monzo Vs Starling

Monzo V Starling feature image

Updated on:

Written by: Michael Barton

Updated on:

Written by: Michael Barton

Michael has almost quarter of a century’s experience in the financial world. This includes trading and institutional sales trading, and in senior positions to VP of Global Equities, as well as Head of Trader Training, at companies including Merrill Lynch (SNC), Cargill Investor Services, and Goldman Sachs. Michael’s experience also extends to providing financial advice as a personal financial advisor in the UK.
This article has been fact checked by a member of the Wallet Savvy editorial team and complies with our editorial standards.

Two digital banks go head to head in this comprehensive review. It’s Monzo v Starling, and we’re here to unveil everything from features and fees to ease of banking and, of course, security.

I never thought I would love banking online, but I’ve been converted by the time-saving ease and security features that online banking apps provide. I’m not the only one, either.

According to the latest banking stats, more than 90% of Brits were using online banking in 2022, and the number of Brits with a digital-only bank account has risen from 9% in 2019 to 24% in 2023.

If you’re considering opening your first digital bank account, or switching to digital only, then this article is a must-read. We’re going to walk through a comparison of two of the most popular digital banks in the UK – Monzo and Starling.

Monzo V Starling – Which Is Best?

Both Monzo and Starling offer a range of features and options that will help you manage your money better. These features include spending analytics, budgeting tools, and savings pots, as well as features like roundups to help you save more easily.

They both also offer routes for investing from as little as £1.

Both banks allow a range of accounts, including joint and business accounts. However, for those who want a more traditional banking experience online, you’ll find this with Monzo – it excels for savers and borrowers.

On the other hand, Starling is probably best if you want greater spending flexibility and business account features.

The Nuts and Bolts of Monzo and Starling

Monzo and Starling are two of the UK’s most prominent examples of challenger banks. They both started life in 2016, and have been disrupting how banking is done since then.

Monzo loans and overdrafts app

There are no branches where you can conduct business banking. Instead, your bank is in the palm of your hand – on an app on your smartphone. This puts you in control of your banking in real time at any moment of the day. This level of financial control is liberating!

Are these banks any good at what they do? You bet, they are:

  • Starling won the Best British Bank award at the British Bank Awards between 2018 and 2021
  • Monzo pipped them to the post as Best British Bank in 2022
  • In 2023, Monzo took home the Best Banking App and Best Credit Card Provider awards, while Starling was named as Best Business Banking Provider

Both banks offer a range of features and account types. You can use their tools to help you budget and save more easily, and both offer overdraft facilities for those times when money is tight.

You can also earn rewards with both cards – this includes cashback. (Stop Press: Monzo has only recently added cashback to its suite of rewards for account holders.)

Both banks are registered and authorised under UK banking laws, so you benefit from protection under the Financial Services Compensation Scheme (FSCS). This means that up to £85,000 of your money in either bank is protected should the bank go bust.

Let’s take a look at how the features and benefits of Monzo and Starling accounts measure up against each other.

Types of Account

Both Starling and Monzo offer a range of accounts. These include personal and joint accounts. However, there are a few key differences, summarised in the following table:

Monzo v Starling comparison Grid

Monzo’s paid-for accounts, Plus and Premium, cost £5 per month and £15 per month respectively. However, this payment opens up many more features, including fee-free withdrawals abroad, roundups, customisable spending analysis tools, and interest on your current account.

As a Premium account holder, you also benefit from access to phone and travel insurance, higher interest on your current account, and discounted airport lounge access.

Starling does not offer a paid-for account. However, this doesn’t mean you get fewer features than you do as a Monzo account holder. You’ll still have savings pots (called ‘Spaces’ at Starling), as well as a suite of money management tools, roundups, and bill splitting facilities.

Spending and Budgeting

Both banks offer budgeting features within their apps. You’ll receive instant notification of spending or payments being taken, and you can analyse how you are spending your money to help you manage your money more effectively. You’ll be able to manage your card through the app, too.

Monzo and Starling both allow you to connect accounts from other banks, meaning you get a 360-degree view of your finances. Monzo also allows you to set budgets and spending targets, which is great for spotting worrying spending trends and poor financial habits.

Both offer fee-free ATM withdrawals in the UK, though Monzo will charge 3% of any amount withdrawn over £250 in a month.

You can use ApplePay and Google Pay with both Monzo and Starling, but only Starling allows Samsung Pay.

To summarise:

Monzo and Starling budgeting comparison grid

Cashback

Both Starling and Monzo offer cashback for eligible spending. You’ll need to check the details on the respective apps and terms and conditions, but Monzo has hit the ground running.

Monzo’s cashback offer has opened with between 2% and 10% cashback on spending, saying, ‘Most offers are in the top 10% of brands where our customers shop.’

Saving and Investing

Saving

Starling Different Spending Pots

Both banks have tools that will help you save, and offer enticing interest rates on their current accounts.

Starling charges no fees for day-to-day banking. It pays 3.25% AER on its current account balances up to £5,000.

Monzo does not pay interest on its current account balances. However, you can transfer your money to an instant access account and earn 4.10% on balances up to £100,000. This rate of interest paid increases to 5.60% for Premium account holders.

As an account holder at either Monzo or Starling, you’ll be able to take advantage of savings pots or spaces and roundups.

A roundup happens when you spend money on your card. The spend amount is rounded to the next whole pound, and the difference is automatically transferred to your savings account. These are great tools to help you save toward specific savings goals.

Monzo v Starling savings comparison grid

Investing

Both Monzo and Starling offer investment products, though Monzo has only recently added an investment facility (October 2023).

Monzo offers three investment funds managed by BlackRock. You can invest from as little as £1. The investment funds are based upon the risk level you are happiest with:

  • Careful (low risk, with around 80% in bonds, and around 20% in shares)
  • Balanced (medium risk, with around 24% in bonds and 66% in shares)
  • Adventurous (higher risk with 100% of your investment in shares)

Each fund is diversified within its asset range, and actively managed. As you move up the risk ladder, from careful to adventurous, your fund may increase faster in good markets but may also fall faster in bad market conditions.

You’ll pay a fund management fee and a platform fee. If you are a fee account holder, the fee you pay will be a total of 0.59% per annum of your fund value. If you are a Plus or Premium account holder, you will pay 0.49% per annum.

You can invest using a stocks and shares ISA or into a General Investment Account (GIA).

Starling offers an investment facility through its ‘Starling Marketplace’, connecting you with Wealthify for simplicity investing.

As a Wealthify customer (you’ll be able to view your investments on the Starling app), you can invest in products that include ISAs, pensions, and general investment accounts. As with Monzo, you can invest as little as £1.

Wealthify is what is known as a ‘robo-advisor’. You’ll need to answer a questionnaire, with questions designed to measure your attitude and tolerance to risk, as well as establish financial objectives. Your money is then invested in a range of investments to suit your profile.

You’ll pay a little more in charges than you do with Monzo – with a total charge of around 0.76% per annum.

Monzo v Starling investing comparison grid

Borrowing

Most people need a little financial help from time to time. It may be that you need to dip into an overdraft facility for an unexpected expense (though, if you’ve saved an emergency fund this should never be the case).

Perhaps you need to access a personal loan, for a deposit on a car or other major expenditure. Maybe you’ve seen a bargain in the sales, but don’t have the cash available right now.

You’ll be pleased to hear that both Monzo and Starling offer solutions for you, though Monzo has a more comprehensive offering for personal customers. Monzo’s Buy Now Pay Later facility is called Monzo Flex.

Interest rates depend on a variety of factors, and are subject to change:

Monzo v starling borrowing comparison grid
* Pay off within three months at 0%. If you need more time, the interest rate is 29%. ** Starling charges a 4% arrangement fee for business loans, plus interest based on your business circumstances.

Spending Abroad

Neither Monzo nor Starling charge fees for using your debit card to make purchases while abroad. You’ll also find that they both offer highly competitive exchange rates.

However, if you wish to withdraw cash while you’re travelling, then Starling will be the cheaper option:

  • As a Monzo user, you’ll only be able to withdraw £200 from an ATM abroad in a 30-day period before being charged for the privilege. After this, the charge is a hefty 3%. Be aware also that if you are travelling in Europe, any ATM withdrawal (whether in Europe or the UK) will incur a charge if a combined limit of £250 in ATM withdrawals is exceeded.
  • With Starling, you can withdraw up to £300 per day at home or abroad without fees being applied.

Customer Support

Even the most technically able of us need some support sometimes. With your banking, this can be crucial. So, how do Monzo and Starling measure up?

The answer is that, as my dad used to say, “You couldn’t get a fag paper between them.”

Both have an onsite, comprehensive frequently-asked-questions section, with questions divided into categories to help you find the answer you need. They both offer an in-app support service, with options to send a message or talk to an advisor via live chat.

Monzo also provides a freephone number for the most urgent queries (between 7am and 8pm).

Are Monzo and Starling Safe to Use?

With no branches, and no face-to-face contact, it’s natural that you might be concerned about the safety of your money held with a digital bank. Good news – you have no need to be concerned on this score.

Both Starling and Monzo are registered and authorised as banks in the UK. They are obliged to do all they can to protect your money. This includes:

Money And Mobile App Security

Both banks are UK banks that are fully regulated with the same rules as banks in your local high street. Measures common to both banks include:

  • Using security features when logging into the app. These include fingerprint, passcodes, and facial recognition.
  • When setting up an account, you’ll need to verify your identity using documents with photographs and providing a short video of yourself.
  • Providing your password when setting up an in-app payment.
  • Security features used by banks to protect your personal data from attack.

Protection for Your Money

Your money is also protected by the Financial Services Compensation Scheme (FSCS). This means that should Monzo or Starling be hit by unexpected events (for example, entering into bankruptcy), up to £85,000 of your cash held in that bank is protected (£170,000 for joint accounts).

Opening an Account

It’s incredibly easy to open a bank account with Monzo or Starling (or both). Fast, too.

You’ll need to download the app, and then apply through that. There are a few questions to answer, and you’ll need to confirm a few details – like age and residency status.

You’ll also need to record a short selfie video (don’t worry, you’re not auditioning for a role in Hollywood!) and provide a photo of your photo ID document (like a driving license or passport).

There are no credit checks, and the entire application process takes less than 10 minutes. That’s probably less time than it takes you to get out of your front door and travel to your local town, before parking and walking to a high street bank to request an account.

In most cases, your account will be verified as opened within a couple of hours. Your debit card will be sent free of charge, and your bank account will be up and running.

Monzo v Starling application process comparison grid

What Other Customers Say

Both Monzo and Starling offer accounts that provide pretty much everything you might want from a digital bank – and they are both still innovating, too. But how do others rate them?

Here’s how they measure up against each other on Trustpilot:

Monzo

78% of reviewers give Monzo a 5-star rating, with 13% giving it only a 1-star review, for an overall rating of 4.1 stars.

High ratings include comments about the design and ease of use of the app, as well as rating customer support highly. Low scorers mention issues with setting up payments and account reviews.

Starling

Starling outscores Monzo on Trustpilot, with an overall rating of 4.4/5 stars – 76% of reviewers scoring Starling 5 stars and 11% scoring it as 1 star.

Reviewers of Starling also mention ease of use. Those who rate Starling lowest include comments about issues setting up their accounts and sending payment abroad.

Tips to Get the Most from Your Monzo or Starling Account

With control of your bank in the palm of your hand, you will now have the potential to power up your money management. Here are my tips to get the most from Monzo or Starling:

Monzo app dashboard and cards

Be Sure to Open the Account You Need

Before opening an account with either Monzo or Starling, think carefully about your needs.

Both Monzo and Starling offer many of the same or similar features in their subscription-free accounts. Monzo’s Plus and Premium accounts may provide you with useful added features.

Use the Budgeting and Spending Tools

Most bad financial habits develop from a lack of understanding of your spending patterns. When I first took real control of my finances, it was because I began to appreciate just how I was spending my money.

Both Monzo and Starling include incredible tools to help you get a grip on your finances. Use them!

Automate Your Savings

Take the strain and pain out of saving – put your savings on super-drive using the auto savings features available, like roundups, savings pots, and savings spaces.

Monitor for Cashback and Rewards

Before you head out to the shops or settle in for an online shopping session, make sure to spend a few moments catching up on the cashback deals currently available with Monzo and Starling.

Up to 10% cashback is not to be turned away!

Take Care with Borrowing

Who was it who advised, “Never a lender nor a borrower be”? I can’t remember right now, but they were right.

However, if you do find yourself needing to dip into an overdraft or take advantage of a personal loan, weigh up the interest payment implications first. There are often cheaper options available if you shop around.

Understand and Watch for Fees

Make sure you understand the fee structure when withdrawing cash or spending on your cards. There are limits on how much you can withdraw free of charge, or spend abroad, without incurring fees.

Don’t break these, and you won’t see unwanted fees charged to your account.

Explore Your Investment Options

Once you have the savings bug, you’ll want to progress to investing to protect your financial future. Here, again, Monzo and Starling provide some great investment options, especially if you’re a beginner investor.

When considering investing, always be mindful of your limitations – consider your financial goals, timelines, and risk appetite.

Alternatives to Monzo and Starling

If neither Monzo nor Starling appear to be quite what you are looking for, then you might try one of these alternatives:

Chase

Chase banking app and card

Chase is a digital bank offering many of the features of a traditional bank account. It offers 1% cashback on eligible spending and a good rate of interest on your current account.

It’s also great for those travelling abroad. However, there is no facility to deposit cash into your account, and also no overdraft facilities available. Probably best as a secondary bank account.

Curve

Curve is an app that helps you to connect all your payment cards, to give you a full and up-to-date view of your banking position. You can use the Curve card with complete control.

So, not a bank, but a financial app to put you in charge of your payments – but with fee-free spending of up to £1,000 every 30 days and worldwide travel insurance, it may be worth signing up for one of Curve’s premium cards.

Cashplus

An app-based current account – easy to open, but with basic banking features. However, this could be a good option if you wish to build your credit score.

Revolut

Revolut is a financial app that offers a range of features, including to help you spend more wisely and save money. You can link your existing accounts, and the Revolut card is a good option if you want a card to use abroad.

There are a range of plans to choose from, but Revolut does not have a UK banking license, so it’s not going to replace an existing UK bank account.

Monzo v Starling: The Bottom Line

Starling Dashboard

Both banks put control of your day-to-day banking and finances in the palm of your hand. It is a liberating experience. You’ll find both apps are extremely user-friendly. Both banks are highly rated by customers and the industry.

With little to choose between them, the choice between the two comes down to your personal banking needs.

Monzo is especially suitable for you if you are a borrower or saver who requires a few added perks from their digital bank account.

You’ll get comprehensive money management tools combined with traditional banking features, as well as innovative features like customisable spending analysis, auto-saving tools, and high interest rates.

On the other hand, if you are an entrepreneur with a need for a more flexible business banking account, or need greater flexibility of banking, Starling offers a streamlined approach. You won’t get the added extras of Monzo’s paid-for accounts, but there is certainly enough in Starling’s toolbox to satisfy most needs.

Sources:

  • https://www.finder.com/uk/digital-banking-statistics
  • https://www.altfi.com/article/9207_monzo-dethrones-starling-at-the-british-bank-awards
  • https://www.altfi.com/article/10686_chase-chases-challengers-away-at-the-british-bank-awards-2023

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