Starling Bank Vs Monzo (2024)

Starling Bank and Monzo are among the fastest growing app-based banks and both are worth considering if you’re in search of a new current account.

But which of the two digital brands could be right for you? We’ve compared these two ‘challenger banks’ side by side to make the decision easier.

Monzo vs Starling Bank: at a glance

Monzo and Starling are both app-based financial providers, set up within the last 10 years. Neither has branches or a high street presence, so they’re likely to appeal to customers who carry out their banking and financial admin exclusively from their mobile.

Both providers are authorised and regulated as banks by the Financial Conduct Authority. This means they can offer a full suite of banking products. It also means that customers’ money is protected (up to £85,000 per person) under theFinancial Services Compensation Scheme.

Both brands offer personal accounts, joint accounts, business accounts and accounts suitable for teenagers and younger children.

Among its other services, Monzo offers an easy access cash ISA and an investment account, run in conjunction with fund manager BlackRock. It can also offer loans and short-term credit (called Monzo Flex). Starling Bank offers overdrafts and money transfer among its services. It also offers a one-year fixed rate savings bond.

How do Monzo and Starling’s banking services compare?

Monzo has four current account options: Monzo current account, Monzo Extra, Monzo Perks and Monzo Max (more on the account charges below).

Customers can manage standing orders and direct debits, split bills, view a categorised breakdown of spending, and receive notifications about past and upcoming transactions – all through the app.

It offers overdrafts up to £2,000 with an APR or 19%, 29% or 39% (variable) depending on your circ*mstances. Overdrafts are subject to a customer’s financial situation and credit score.

Monzo doesn’t charge a foreign transaction fee for using your debit card abroad. Limits and charges on cash machine withdrawals (in the UK and overseas) depend on how you use your Monzo account (more on this in the interest rates, fees and charges section below).

Another handy tool is Monzo’s automated savings which either rounds up every transaction to the nearest £1 and sets aside the change in a pot, or automatically puts money aside every time you spend. Customers can also arrange to pay bills from a designated ‘savings pot’.

In July 2024, Monzo announced the launch of its Monzo Pension consolidation tool which enables customers to combine existing workplace pension pots into a single retirement fund. They can then monitor its performance through the Monzo app.

Users will just need to share details of where they worked and when, and Monzo will track down the respective workplace pension pots and invest them into a retirement fund managed by BlackRock. The choice of fund will be determined by the number of years the customer is away from retirement.

Any number of pension pots can be combined.

Monzo Pension charges an annual fee of 0.63% of the amount invested. This comprises a 0.45% fund management fee from BlackRock, and a 0.18% platform fee from Monzo. However, Monzo Max and Extra customers pay a reduced fund management fee of 0.35%, and there are no drawdown or exit fees.

Monzo Pension is yet to officially launch, but customers can register their interest from 24 July 2024.

Starling Bank

Starling’s current account, which is online or app-based, comes with no monthly fee and currently pays 3.25% interest on credit balances, including cash set aside in its saving ‘spaces’ up to £5,000. Eligible customers can arrange an overdraft of up to £5,000, subject to circ*mstances and credit score. Day-to-day banking is free.

Customers can withdraw up to £300 a day from cash machines with no charge and cash can be deposited at The Post Office – up to a maximum limit of £1,000 per calendar year. Cheques can be scanned to pay in remotely.

There are no fees to use the Starling debit card overseas and fees to send money from your account to a recipient abroad are low.

Starling also offers budgeting tools, such as virtual jars to segregate money for different types of spending, plus there is a fixed rate savings account available.

Interest rates, fees and charges for banking

Monzo has four current accounts:

Current account: no monthly or annual fee and day-to-day banking is free. It currently pays 4.1% (variable) on in-credit balances up to £100,000. If Monzo is your main bank account you can make unlimited cash machine withdrawals, including fee-free withdrawals in the EU. Outside these regions, you can withdraw £200 fee-free every 30 days (3% charge thereafter).

If Monzo is not used as your main current account then there is a cash machine withdrawal limit of £400 per month in the UK and EEA (3% charge thereafter).

For Monzo to be your main account you must either deposit £500 a month or receive your monthly State benefit into the account, or you must have at least one active direct debit, or have received a student loan payment into the account within the last eight months.

Overdrafts are available up to £2,000 for eligible customers and the interest rate, if you qualify, will be either 19%, 29% or 39%, depending on your credit score. The higher your score the lower the interest rate you’ll get. Debit card spending is fee-free overseas. There is a £1 charge per deposit for cash deposits made at PayPoint terminals

Monzo Extra: This account charges £3 per month. Customers can link other bank and credit card accounts so they’re visible in the Monzo app. Cash withdrawals are free and unlimited in the UK and European Economic Area if Monzo is your main bank account, and outside these regions you can withdraw £200 fee-free in every 30 day period. Outside this limit, there’s a 3% fee.

This account offers advanced budgeting tools, plus discounts and partner offers on spending, among other additional benefits such as virtual cards and insights into your credit score.

Monzo Perks: Charges £7 per month and includes a range of extra features and benefits on top of standard banking services. Perks customers can make three cash deposits each month for free, and also receive discounted fees when using Monzo’s investment services.

Account balances earn an improved interest rate of 4.60% AER (variable).

The account also comes with a free annual Railcard (subject to your eligibility), and a free weekly treat from Greggs.

You can make unlimited withdrawals in the UK and EEA, and withdraw up to £600 per month fee-free elsewhere (3% charge thereafter).

Monzo Max: Charges £17 per month, and offers all features included in the Extra and Perks plans, along with worldwide travel insurance, worldwide phone insurance and UK and European breakdown cover.

Bear in mind that if you choose Monzo Max, you’ll need to sign up for at least three months.

In contrast to Monzo, Starling Bank has just one current account offering. It charges no fees for day-to-day banking and its cash machine withdrawal limit is generous at £300 per day fee-free.

Its arranged overdraft has a representative APR of 15%, although some customers will pay more (up to 35% EAR) depending on their personal circ*mstances and credit history.

As well as paying 3.25% on its current account (on balances up to £5,000), Starling offers a one-year fixed rate savings bond paying 4.48%. Savers can deposit between £2,000 and £1 million to take advantage of the rate.

The account enables you to link other financial accounts to your Starling account to view all your finances in one place. It also offers budgeting and savings tools and instant notifications on transactions from your account.

Customers can deposit cash into their account in post office branches. The maximum annual limit for free cash deposits is £1,000 per calendar year, after this level customers must pay a charge of 0.7%.

Monzo vs Starling Bank: account offerings at a glance

What do the reviews say about Monzo and Starling?

When it comes to customer reviews for their banking services both Starling Bank and Monzo score highly.

Monzo has a score of 4.1 out of 5 on Trustpilot, while Starling gets a slightly higher score of 4.3. Customers mention how easy it is to use both apps, and the fee-free overseas use, also available with both, is also popular.

Fairer Finance, which compiles independent ratings of financial providers records Starling Bank as having 75% for its customer experience rating for its bank account. This just pips Monzo, which gets a score of 70%. Both challenger banks are in the top five for their customer experience rating, only beaten by First Direct.

Monzo vs Starling Bank – which is best for you?

Whether Monzo or Starling is the best for you will depend on your personal requirements from a bank account, such as how you want to use it.

For Monzo, for example, the benefits are also likely to be increased if you intend to use it as your main current account, rather than a supplementary account. This is because cash machine usage is more limited if it is not your main account.

Both accounts offer a debit card which has no fees for overseas use which could be attractive to frequent travellers. Likewise both have a broad range of sophisticated budgeting and savings tools, which set them apart from many mainstream high street banks.

If you need an overdraft facility then Starling Bank has a lower interest rate on borrowing. But for those who are likely to have an in-credit balance, then Monzo pays the higher rate at 4.1% on balances up to £100,000.

On the other hand, if you know you’ll need to make cash payments into the account, then Starling Bank has a better deal on cash deposits, compared to Monzo.

There’s a broad range of things to consider when making a choice about a new current account. But if you’re keen on the convenience and low fees of app-based and online banks, ensure you compare across the whole market before you make your decision.