Monzo vs Revolut: Detailed comparison and review

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 license from British regulators in 2016 and now has nine million customers.

Rival Revolut isn’t actually a bank as it doesn’t hold a banking license (more of what this means later). However, 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 onto your prepaid Visa card. 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 operate like a bank, which includes lending.

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 insurance thrown in such as travel, phone and breakdown cover.