Starling vs Monzo: which is better?
If you’ve followed me for any length of time you will probably know that I am a huge fan of Starling vs Monzo. Starling Bank are what’s known as a ‘challenger’ bank, and challenger banks are changing what banking looks and feels like. What I love about challenger banks is that through the use of their intuitive, easy to use apps, they are more like personal finance assistants than high street banks.
As our lives become increasingly dynamic, fast paced, and mobile-ready, challenger banks like Starling Bank and Monzo are giving us exactly what we need; banking at our fingertips (literally, via apps on your phone!), real time, very clever, easy to understand reporting, and clear habit and spending insights.
We all place different meaning and value towards money because we all have a different relationship with money. More than 90% of the decisions we make about money come from our subconscious mind. We are driven to make decisions about money based on both logic and emotion and interestingly this is why some women prefer managing money by looking at facts and figures and others on intuition and imagination.
Starling Bank and Monzo’s money pots directly enable their users to do both! The visual money pots allow you to get creative about money goals and the categorisation of your spending habits enables you to see the facts.
Starling Bank and Monzo have many similarities:
At a glance
|Payments||Pay out via bank transfer, Contactless, Chip and Pin, Paypal, Apple Pay, Google Pay, Fitbit Pay, or Garmin Pay||Pay out via bank transfer, Contactless, Chip and Pin, Apple Pay, Google Pay, or send immediately to another Monzo account|
|UK ATM Withdrawals||Free||Free|
|Topping Up||Via bank transfer, standing order, have salary paid in, or pay in at any Post Office||Via bank transfer, standing order, or have salary paid in|
|Freeze Card||Yes, in app||Yes, in app|
|Interest||0.05% AER up to £85,000||Access to marketplace, up to 1.31% with minimum £500 deposit (fixed term). Rates from 0.10%-0.93% available on instant access savings|
|Goals and Pots||Create different spending goals and protect money from daily spending||Monzo pots let you put money aside, protected from your daily spending. Pick a Pot to pay bills from, so you can’t accidentally spend the rent. When a bill is due, they pay it from the Pot for you.|
|Travel||No fees or charges||Foreign ATM withdrawals free up to £200pm, 3% thereafter. Free to use your card abroad to pay for goods and services.|
|Borrowing||Overdrafts and loans up to £5000.||Overdrafts up to £3,000. Loans up to £15,000. Both with a soft credit check.|
|Safety||FSCS protected up to £85,000||FSCS protected up to £85,000|
|Business Account Available||Yes: FreeVoted Best Business Banking Provider 2020||Yes. Business Lite: Free|
Business Pro: £5pm
|Joint Account Available||Yes – as long as you both have a Starling account||Yes – as long as you both have a Monzo account|
|Support||24/7 human customer support team via app, email, and phone.||Existing customers can get help via the app.|
|Special Mention||Won Best British Bank and Best Current Account 2020||Put your salary into Monzo and we can advance you the cash one day early. No cost, no hassle. Just more time with your money.|
Opening an account
Both Starling Bank and Monzo are completely free to open. They are also both powered by their own apps, and it’s really simple to open an account. All you need to do is open your app store (I’m an Apple girl, but the apps are also available for android devices), download the app and then follow the account opening prompts. Click here for Starling (affiliate link) or here for Monzo.
You will need to take a photo of your ID which will be sent for verification as the final step of opening an account with either Starling Bank or Monzo. You’ll also need to record a short video selfie as part of the process, and the reason for this is that both banks use a type of technology which matches the video footage to your ID. Starling Bank says they aim to complete this process for personal accounts within 10 minutes, and Monzo say they try to verify all accounts within 2 hours but it will often be quicker than that.
Both Starling and Monzo are completely free to open and use with no ATM withdrawal fees or charges.
Paying in and out
Both accounts offer a free current account switching service and are just like high street banks in that you can have your salary paid into your account. You can also pay in via bank transfer or standing order with both Starling and Monzo. Starling go one step further and allow you to pay in cash at any Post Office.
Remember, both Starling and Monzo are just like high street banks – you can set up Direct Debits, Standing Orders, and complete bank transfers from both apps. Both accounts provide contactless chip and pin cards and allow you to add your card to Apple or Google pay. Starling also supports Fitbit Pay and Garmin Pay.
What’s great about the challenger banks is the level of reporting and insights they offer, which are easy to understand and easily accessible within the apps. Monzo will remind you via notifications on your phone when a Direct Debit is due, allows you to set budgets for spending areas, and will also has the capability to send you warning notifications if it thinks you’re spending too fast.
Both apps split your spending into categories like ‘bills and services’ or ‘groceries’. This is an amazing feature because it allows you to really understand your spending habits, easily identify areas of overspend, and take steps to plug those leaks.
The round-up feature that both apps offer is a fantastic way to add to your financial resilience pot – when you switch the feature on both apps simply round up all of your spends to the nearest £1 and add the difference to a pot of your choice. You would be amazed at how quickly this adds up!
One of the advantages of Starling Bank over Monzo is that Starling Bank pays you interest on any balance up to £85,000. This is paid on your entire balance including any money in your main cash pot area and any money stored safely in your pots.
You can access varying interest rates via the Marketplace with Monzo, but these are paid on savings only, not on any of the money in your main Monzo account or pots. This might be a deal breaker for you if you keep large amounts of money in cash, but in reality even if you only have a small amount of money in your account, Starling Bank will pay you interest on it (free money!) and Monzo will not.
Goals and Pots
Both accounts offer pots or spaces to move money away from your everyday spending area, but keeping it in the same account. For me, this is revolutionary because it allows you to bring things like the envelope budgeting system and mental accounting into the modern digital age.
Before the likes of Starling Bank and Monzo, if you wanted to keep money in a separate area it would usually need to be in an entirely different account like a savings account. Or literally cash in envelopes! When you move money into pots in either Starling Bank or Monzo that money still physically exists in your account, but it is essentially ringfenced. When you use your card to pay, any money that is in a pot – not in your everyday spending area – will not be touched.
What’s great about this is it gives you a super easy way to give every pound coming into your account a purpose, one of the key lessons I teach my Money Circle members.
Monzo just tips the scale on this feature over Starling, as it has an extra feature level which lets you pick a pot to pay bills from. When a bill is due, they pay it from that pot for you. Within Starling, if you have a bill due you need to remember to go into the app and move money from the pot into the main everyday spending area.
Monzo also added a scheduled pay to pots feature in 2018, which Starling are yet to offer. Simply start a new scheduled payment, choose a start date and pot, set a repeat frequency (and end date if you choose). Monzo say “You can change or cancel the scheduled payment whenever you want. And you can always withdraw the money if you decide you want it back in your main balance.” (Source)
If you travel often, then Starling really is a clear winner for you. With Starling bank there are no fees whatsoever for using your card abroad or to withdraw from overseas ATM machines. Monzo do offer fee free spending, but you can only withdraw £200 per month from foreign ATM’s before it starts to charge you.
Starling bank offer overdrafts and loans up to £5000, dependant on your eligibility. They have a great overdraft eligibility tool which tells you the likelihood of being eligible for an overdraft without having to perform a credit check which will leave a ‘footprint’ on your credit score. If you are eligible for a loan you will receive a notification in your app to let you know, and if you choose to take out a loan with Starling, once the application is completed the money is available instantly.
Monzo have a similar eligibility check for overdrafts up to £3000, and offer loans up to £15,000 available on the same day you successfully apply.
Are Starling and Monzo safe?
Both Starling and Monzo are fully regulated banks and protected up to £85,000 by the Financial Services Compensation Scheme (FSCS). The FSCS is an independent fund set up by the government to help protect people’s money. If Monzo or Starling (or any other bank or building society) goes bust, it means you won’t be left out of pocket. The FSCS aims to pay compensation within 7 days of an organisation failing, so your money really is just as safe as it would be with any other high street bank or lender.
If you run a business, Starling bank once again comes out on top for its business account. A business account with Starling is completely free and offers all the awesome features of the personal account with the addition of some brilliant features such as connecting to accounting software like Xero, Quickbooks, or FreeAgent.
Monzo business accounts do offer these features but only on their paid for account. Monzo has two levels of business account available: Lite and Pro. If you want to use the accounting features you will need to hold a Business Pro account which will cost £5 per month. To balance it out, however, the Monzo Business Pro account is offering 6 months free Xero use until 17th June 2020 (for new Xero customers only) which could save you up to £180. If you are planning to use Xero anyway, this offer is essentially worth 3 years of the fee attached to the Monzo Business Pro account.
Starling bank also offers joint accounts as long as you both have personal accounts, something which Monzo have recently added to their features.
Worth a mention
Starling Bank won Best British Bank and Best Current Account 2020, which really is testament to the amazing work they are doing. Starling bank also give you access to their Marketplace on both personal and business accounts where you can integrate several third party financial products. From mortgage and insurance providers to smart pension tools, the marketplace includes a hand picked a selection of third-party products that work with your Starling app. The reason this is so fantastic is because it gives you the ability to see a full overview of many of your financial products, accounts, and services all within the one Starling app.
Monzo do have some third party features such as energy switching and savings accounts, but their marketplace is certainly not as diverse as Starling bank’s. Monzo’s ‘get paid a day early’ feature is worth a mention: if you have your salary paid into your Monzo account Monzo say that they “can advance you the cash one day early. No cost, no hassle. Just more time with your money”.
Starling vs Monzo: the best bank ever?
Both Monzo and Starling bank are great options if you’re looking to open an account with a challenger bank. For me, there’s a few reasons that Starling Bank has the upper hand: if you travel often then it’s clear that Starling is your better option, and for those of you in business or self employed their business account offers some excellent features without having to pay the fee that Monzo charges. Their customer support, should you need it, is available 24/7, and Starling’s offering of investing tools like Wealthify and Wealthsimple through the Marketplace make it easier than ever to get started investing without overwhelm, and from as little as just £1.
Starling pays interest on your whole balance, rather than just on your savings as Monzo offers, and integrates with more payment features than Monzo such as Fitbit Pay and offering pay-in at Post Offices anywhere in the UK.
My preference, for all those reasons, is unwaveringly towards Starling Bank. But with that being said, the ability to utilise pots within one account is absolutely game changing for both personal and business finance, and opening an account with either challenger bank will undoubtedly revolutionise your life!
This post was updated June 2020 to reflect updates to both Starling and Monzo.
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