Using a bank without any branches – and operated solely through a mobile app – would have been considered radical just a few years ago.
But now that over-the-counter services are no longer available in huge swathes of Britain, and after the collapse of customer service at many of the established banks, having a current account with Monzo or Revolut, the two biggest names, is becoming a no-brainer for many of us.
But which of Monzo or Revolut (or one of their rivals) should you pick? Telegraph Money weighs up the pros and cons – and reveals which one is our favourite.
A history of Monzo and Revolut
From a founding team of just over a dozen people in 2015, to a company of around 3,500 today, Monzo was launched with “the mission to make banking better”.
The bank, known for its hot coral-coloured debit cards, clinched a coveted banking licence from British regulators in 2016 and now has nine million customers.
Rival Revolut was very recently granted a UK banking license, with restrictions. It’s now in what it describes as a “mobilisation” period, where it must finish setting up its regulatory banking processes before it can launch as a fully fledged bank. Previously, and for now, it offers “e-money” services in the form of a pre-paid Visa card – physical or virtual. Founded in London in 2015, Revolut now has eight million UK customers.
How features compare
Money in a standard Monzo current account earns 4.1pc interest – though only if you move your money to a separate, linked savings account.
Monzo offers overdrafts up to £2,000 for all eligible banking customers. The interest rate charged depends on your credit score. Rates will be 19pc, 29pc or 39pc, with the lowest reserved for those with the best credit track records.
You can pay bills from a “bills pot” that is kept separate from the main account, so it enables you to earn interest between payday and when the bill is due.
There’s also an option to automatically round up and save spare change into a specified pot every time you pay for something. If you get paid through Monzo, the bank can advance you the money at 4pm on the day before it’s due.
What about investing?
As a Monzo customer you can invest in a general investment account or stocks and shares Isa using its built-in service which gives access to one of three funds based on how risky you want to be.
The funds are run by BlackRock, a giant American investment company, rather than Monzo itself. You can invest from as little as £1 and track how your money is doing alongside the rest of your finances within the app.
You can also view your mortgage balance and the app will nudge you to lock in a new rate when the term ends.
To assist with budgeting, the app will display upcoming bill payments and tell you in advance how the bill compares to the same bill the month before.
At Revolut, you load money on to your debit card – it issues both Mastercard and Visa cards. There’s no interest paid on the balance, and a linked savings account pays just 2.29pc. There’s no option of an overdraft as Revolut cannot currently operate like a bank, which includes lending. As it has now secured a UK banking license, this is set to change.
You can set up direct debits on the card – at no cost – and there’s a foreign currency exchange service with no-fee ATM withdrawals, and no hidden fees when it comes to transfers.
Revolut also offers an investment option in the wealth section of the app including the chance to invest in individual stocks and cryptocurrencies. This offers far more choice than Monzo, but unlike Monzo, Revolut only offers investing in a general investment account. This means that capital returns and dividends may be subject to tax.
In the lifestyle section you can book a holiday and earn cashback on your accommodation bill.
Budgeting features include rounding up spending to the nearest £1 to place in savings, sorting bills and subscriptions into “pockets” so you can see where you spend, instant spending notifications, a bills splitting feature, and it also allows you to get paid one working day earlier than usual.
Account types and card options
Monzo offers a menu of four accounts – newly launched in April. The free option offers access to the saver rate and basic banking needs. Paid accounts give you a little more. There’s Extra (£3 a month), Perks, (£7 a month) and Max (from £17 a month). The more you pay, the better the perks.
For example, the Perks option comes with access to a savings account at 4.6pc, an annual Railcard and a weekly treat from Greggs. If you go for Max, you also get insurances thrown in such as travel, phone and breakdown cover.
Monzo’s paid plans used to be called Plus and Premium. Existing customers can remain on these plans, but new customers now choose from the new range.
It’s a similar story at Revolut. You can use a Revolut card for free by selecting the standard card, which allows you to withdraw £200 a month or five withdrawals without charge and a free linked card for a family member aged 6-17 years.
Its fee-charging cards include Plus (£3.99 a month), Premium (£7.99), Metal (£14.99) and Ultra (£45).
The perks get more exciting the more you pay, including airport lounge access either discounted or unlimited, insurance policies and shopping discounts.
For Premium and above, cards come with lifestyle perks including subscriptions ranging from food delivery to fitness. Brands include ClassPass, Deliveroo, Freeletics, Headspace, Picsart, Sleep Cycle and WeWork.
The Ultra card is platinum plated.
International features
Monzo customers can easily send money internationally, thanks to its partnership with Wise which allows direct transfers from within the app. Wise offers transfers in more than 40 different currencies and to over 160 countries.
Revolut customers can transfer money in more than 70 currencies and to more than 160 different countries. Money can be sent directly to another Revolut account for free, via bank account or card transfers.
It has also recently launched a feature to help frequent travellers stay connected. Revolut’s eSIM is a global data roaming plan, allowing you to access data abroad without unexpected fees or interruptions.It is installed from the Revolut app and can be used alongside your existing physical Sim card which is useful if you’re abroad a lot.
Customer support
Monzo’s Trustpilot score shows that 77pc of reviewers give five stars. When the comments are good, they are truly excellent – usually about how easy the account is to use. When customers have an issue, however, serious discontent arises with customer service, with most of those reviewers scoring just one star.
Revolut’s track record shows that 74pc of reviews award five stars with many happy customers praising the simplicity of the app and the excellent international money transfers. Like Monzo, it scores poorly when problems arise around fraud or blocked accounts, and a solution isn’t provided to their satisfaction.
Cardholders on paid Revolut plans are given priority for customer support using the in-app chat, which means customers with a free card might face a longer wait to have an answer to a query.
Security and safety
You can freeze your Monzo debit card any time via the app if you’re worried your card or Pin have fallen into the wrong hands. There’s an approval process for online payments which means you have to verify them in the app before you pay, so you know when your card’s being used online.
To help combat fraud, there’s an in-app feature that will tell you whether the bank is genuinely calling you or if you’re being targeted by fraudsters with an attempted scam. On the call status part of the app if the call is not verified, the status will read “If someone is telling you they’re from Monzo, hang up now”.
Money held in Monzo is protected by the Financial Services Compensation Scheme (FSCS), which pays out in the event your bank or lender goes bust up to £85,000 in the case of savings deposits.
At Revolut, it was reported that its fraud detection system prevented £475 million in 2023. It has recently launched an AI-scam feature promising to help detect if a customer is being scammed, and break the “spell” of the scammer before they send their money to the criminal by blocking the payment.
Since initial testing began, Revolut has reported a 30pc reduction in the fraud losses resulting from card scams where money has been sent for investment opportunities.
You can temporarily lock and unlock your Revolut card for added security, as well as use virtual cards when you’re shopping.
Despite securing its UK banking license, money held by Revolut is not currently protected by the FSCS – this will only be the case once it is able to fully operate as a bank. Instead it will continue to offer an alternative “safeguarding” scheme which is required for e-money firms.
This safeguarding protection is provided by the e-money institution itself, rather than an independent body such as the FSCS.
Revolut’s website states “Revolut, or any e-money institution, failing is unlikely. But if it did happen, our customers’ claims on their money would be paid from the safeguarding account.”
Overall, Monzo or Revolut?
To decide which is best for you, consider how you use your current account and which features are most important to you.
If you travel extensively, would make use of its partnerships with other well-known subscription services or want to invest widely, Revolut might suit you better.
Monzo has better interest rates, and has historically offered greater consumer protection and offers much more of the services that a traditional high-street bank provides – but this will soon change once Revolut’s UK banking license is in full force.
Alternatives to Monzo and Revolut
There are plenty of other digital banks worth considering.
Starling is a competitor that pays current account holders a healthy 3.25pc on balances of up to £5,000. As an account holder you’ll also have access to a one-year fixed saver paying 4.48pc.
You can spend on the debit card overseas without paying fees, which with most other high street banks are typically 3pc per transaction.
If you overspend and go overdrawn, Starling offers a lower than average overdraft rate of 15pc, and there are no charges for unauthorised overdrafts.
Starling’s most popular feature is Saving Spaces. This is where you can compartmentalise your money for saving goals. Money is ring-fenced from your main balance, and you can customise each “space” with a saving target, photos, names and emojis to motivate your saving.
Another popular feature is that the UK-based customer service team are on hand 24/7 either on the phone or on in-app chat.
The app itself is highly rated on Trustpilot with 76pc giving it five stars. Users praise the app for being intuitive and useful. One posted “lovely helpful staff at the end of a phone if you need help.”
Chase Bank, the retail arm of American banking giant JP Morgan, is another option. Its app-only current account pays 1pc on balances and for the first year pays 1pc cashback on your debit card spend. As a customer you can access a savings account paying 4.1 pc.
Like many others, it offers several budgeting and saving features, including “round-ups”, where you can round up everyday spending (such as buying groceries) to the nearest £1. Chase lets you save these extra pennies in a savings account paying 5pc interest.
Spending abroad on the debit card is fee-free, but Chase doesn’t allow bank transfers to overseas accounts and there’s no opportunity to have an overdraft facility.
Chase’s Trustpilot score shows that 70pc of reviews give five stars – the lowest of the four banks we have explored.
