Digital banking giant Monzo has unveiled its new £180-a-year premium account that pays interest, includes insurance and gives customers a metal bank card.
Packaged current accounts have been offered by high street banks for many years and Monzo is a relative newcomer.
But this marks its third foray into the premium market. It launched the Monzo Plus in April 2019 but withdrew the account just six months later after complaints the account did not justify the high charges of up to £12 a month.
Monzo Plus was relaunched this summer with a lower £5 monthly fee and has been followed by Monzo Premium, which offers a steel card to all users.
In addition to the metal card, the account includes travel and phone insurance as well as paying interest on balances of up to £2,000. However, the hefty £15 monthly fee and minimum six month subscription means its appeal could be limited to wealthy customers.
Telegraph Money looks at the key features of Monzo’s new account and how it compares to the rest of the market.
Cards of steel
One of the major selling points of the premium account is the 16g white metal card. However Monzo is not the only brand to offer such gimmicks. Revolut and Curve both already offer a premium card to their customers, charging £12.99 and £14.99 a month respectively.
However, neither have a British banking licence and cannot offer the same range of services as Monzo. Revolut is a prepaid currency card and Curve is a service that allows users to load multiple bank accounts onto one card.
Current account service ratings
More than metal?
Interest rates have fallen in recent months with many banks offering returns of close to zero. Monzo Premium will pay 1.5pc interest per year on balances of up to £2,000. Saving the maximum amount would earn savers £30 in interest over a year, a figure dwarfed by the £180 annual fee.
High street rival Virgin Money offers customers 2.02pc interest on its free current account. This is restricted to balances of £1,000, meaning users would only earn £20.20 in a year.
Another perk is mobile phone insurance, provided by Assurant. This protects customers against loss, theft and accidental damage and includes cover for cracked screens for phones worth up to £2,000. There is a £75 is excess, however.
The account also includes worldwide travel insurance from Axa. This includes cover for medical bills up to £10m, cancellation cover up to £5,000 and lost valuables insurance of £750. The excess is £50 in each case.
Monzo claimed that this coverage would cost the average customer £256 per year on the open market.
What else does Monzo Premium offer?
Customers can view and move money from 14 different bank accounts and credit cards via the Monzo app. This includes American Express cards, which the bank said was the most requested feature from customers.
Other extras include monthly credit score updates, discounted access to airport lounges and advanced budgeting features. It also allows customers to withdraw £600 abroad every 30 days for free.
What are the alternatives?
Most high street banks offer a packaged account, usually including some form of insurance cover. The three most prominent are Co-op Everyday Extra, Halifax Ultimate Reward and Nationwide FlexPlus.
Co-op Bank charges £15 a month, which includes travel, mobile phone and car breakdown cover. Customers can also earn up to £5 a month in cashback.
The £17-a-month Halifax Ultimate Reward account offers worldwide family travel insurance. Mobile phone, car breakdown and home energy cover is also bundled in. This account is more expensive than rivals, but customers signing up will earn a £100 switching bonus. Like the Co-op, it offers cashback rewards of up to £5 each month.
For a cheaper alternative, Nationwide’s FlexPlus charges £13 each month. This includes worldwide family travel insurance, mobile phone and car breakdown cover.
Unlike Monzo, none of these pay interest on balances. Each also has a standard plastic card rather than Monzo’s metal. Consumers should examine all the benefits of each account, and whether they are likely to use them, before signing up.