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5 May 2019

Monzo launches packaged account with travel insurance: is it worth the cost?

We put Monzo's travel cover to the test

Challenger bank Monzo will soon offer customers a packaged bank account, Monzo Plus - with services such as fee-free cash withdrawals abroad and travel insurance - that could cost customers up to £156 a year.

You can choose the colour of your new bank card and receive exclusive Monzo 'swag,' but we found the account's travel insurance cover scored significantly below average on our tests.

Which? looks into what the new Monzo Plus account offers, and how it compares with other packaged bank accounts.

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What do you get with a Monzo Plus account?

Currently, there are limited features available with Monzo Plus, though the bank says it's aiming to add more over time, and that it will eventually be 'completely customisable' in future.

If you're early to the party, you'll get the core features for the discounted rate of £3 a month. Once this offer has finished, it'll be £6 a month. You have to pay for the core services as a minimum, and opt-in for other features - which cost extra.

There's currently a waitlist for the account, as Monzo gradually rolls it out.

New card colours and other core features

Along with being branded as 'Monzo Plus', you can also choose between three colours for your card: the classic Monzo hot coral, light 'lagoon' blue and navy blue (or, as Monzo calls it, 'midnight sky').

Branching out into different colours is an interesting move, considering the neon pink card has become synonymous with the Monzo brand.

Other core features include a custom Monzo.me link, where you can send money instantly via a username; exclusive access to Monzo Plus events; and Monzo-branded 'swag' -- reportedly stickers, T-shirts and hoodies that are emblazoned with a Monzo logo.

Increased fee-free spending abroad

In December 2017, Monzo decided to restrict the amount of fee-free money that could be withdrawn abroad.

While previously you could withdraw as much cash as you liked fee-free while on holiday, you're now limited to £200 every 30 days. Taking out any more cash results in a 3% charge.

With Monzo Plus, fee-free withdrawals increase to £400 a month - but this add-on will cost an additional £3 a month.

Emergency cash

Included with the travel money feature, you can access to up to £1,000 of 'emergency cash' if you lose your card.

The full terms on who is eligible, and how and when you'll need to pay the money back, are yet to be confirmed.

Travel insurance

For another £4 a month, you can get travel insurance cover fromUK company, Pluto.

To see how this feature really measures up, we put it through the Which? policy analysis.

What does Monzo Plus travel insurance cover?

Monzo Plus travel insurance gives you worldwide annual standard cover. We put it through our policy analysis - the same process that's used to calculate our best and worst travel insurance.

We rated the most important elements of the policy, including medical expenses cover limit, cancellation/curtailment limit, travel delay limit, baggage and belongings limit and money limit.

The policy, provided by Pluto, scored 53%, which is significantly below the 64% average score.

This is mainly because the excess is £100, which is high compared with other packaged account travel insurance. For example, the Lloyds policy excess is just £40, and it's £50 with Nationwide and Halifax.

What's more, the cancellation cover is low, capped at £1,500. Our criteria requires cancellation cover of at least £3,000, and many accounts will cover much more. NatWest and Royal Bank of Scotland cover up to £5,000, as does Nationwide.

The Pluto policy also pays out significantly less than other packaged accounts for personal accident cover (£5,000 compared with £25,000), and missed departure (£500 compared with £1,000).

Age and medical restrictions

It's also worth bearing in mind that you must be aged between 18 and 46 to take out this policy. For a single trip you must be within this age range on the date you purchase the policy; for an annual multi-trip it must be your age at the start date of the policy.

Pluto's travel insurance policy also doesn't cover anyone with a pre-existing medical condition, or experiencing any symptoms that are under investigation (or would be under investigation if you reported them to a doctor).

Find out more:best and worst travel insurance

How does Monzo Plus compare with our best packaged accounts?

Most big banks offer packaged bank accounts to their customers, with varying fees, features and levels of cover.

As Monzo Plus doesn't currently include mobile phone cover, car breakdown cover or interest-free overdrafts, it is not directly comparable with other packaged accounts on the market.

While it's not the most expensive packaged account around, it's certainly not the cheapest - somewhat surprising given other providers offer services that Monzo Plus doesn't.

In fact, at the maximum price of £156 a year, Monzo Plus matches the costs of the Nationwide FlexPlus account - the best in our table, with a score of 80%.

Nationwide's account comes with mobile phone cover up to £1,000; £250 interest-free overdraft; car breakdown cover with roadside assistance, home start, nationwide recovery, alternative travel or accommodation and European assistance; worldwide annual travel insurance plus winter sports cover.

While the fact that you can pick and choose which features you want to add is likely to be popular, paying £72 a year (at full price) for the core features - which consist of a different bank card, merchandise, event invites and a Monzo.me link - does seem a lot.

However, there could be more Monzo Plus features on the way. The bank has asked for suggestions on its website for what users would like to use, so this service could look quite different in the future.

It's worth noting that Monzo's appealing current account offer, and its excellent customer service, were both highly rated by customers, making it a Which? recommended provider. You can find out how it scored and how it measures up in our guide to best and worst banks.

Find out more:best packaged bank accounts