Monzo, the popular mobile app bank, is launching a new range of savings accounts paying as much as 1.55% AER.
The bank is partnering OakNorth, a fin-tech savings company, to offer six new savings accounts to its 1.6m customers. This is not the first time , but the rates on offer are significantly higher on its new accounts.
But how do the accounts work, and are they any better than other savings accounts? Which? has looked into what's on offer.
There will be six savings accounts to choose from, which include:
Each account requires a minimum initial deposit of £500. You can save up to £500,000 across all of your savings pots, and - like all - you can only deposit up to £20,000 into the Monzo cash Isa in each tax year, in accordance with the rules.
The cash Isas are also flexible, so if you make withdrawals and re-deposit the money, it won't add to your overall allowance.
The instant-access cash Isa will be available from Monday 25 March, and the other accounts will open in the upcoming weeks.
This means that your savings will still be losing money in real terms; as prices rise, your money won't be able to buy as much.
Currently, Monzo customers can save money into various 'savings pots' - here, money can be accessed instantly, but the cash being saved doesn't earn any interest.
The new savings accounts will essentially give Monzo customers access to OakNorth's savings platform, but you'll be able to open and manage the accounts through the Monzo app.
Monzo says it will receive a small revenue from the savings accounts, and plans to partner with other savings providers in the future.
In November 2018, Monzo launched a savings partnership with Investec, offering 1% on an easy-access savings account with a minimum £1,000 deposit.
In February 2019, this was closed to new customers. Existing savers can keep their Investec pot, but new savers can access the latest range of savings deals.
The table below shows the top-rate accounts across the same terms offered by the new Monzo and OakNorth products.
|12-month fixed-term savings account||Bank of London & The Middle East one-year premier deposit account||2.20% EPR*||£1,000 minimum initial deposit|
|12-month fixed-term cash Isa||Shawbrook Bank one-year fixed-rate cash Isa||1.77%||£5,000 minimum initial deposit|
|Nine-month fixed-term savings account||OakNorth nine-month bond||1.86%||£1,000 minimum initial deposit|
|Six-month fixed-term savings account||Bank of London & The Middle East six-month bond||1.86%||£50 minimum initial deposit|
|Instant-access savings account||Kent Reliance online only easy access account||1.50%||£1,000 minimum initial deposit|
|Instant-access cash Isa||Yorkshire Building Society single access saver Isa||1.46%||£100 minimum initial deposit. One withdrawal per year only|
*Expected Profit Rate. Source: Which? Money Compare,Moneyfacts. Correct 21 March 2019.
As the table shows, none of the Monzo and OakNorth accounts are market-leading - and, in fact, OakNorth's own products offer higher interest rates than the ones through Monzo.
So, if your main aim is to find an account where your savings can earn as much as possible, Monzo may not be the best option for you.
However, several of the top-rate accounts require higher minimum initial deposits than Monzo's products - so, if you have a relatively small savings pot, saving £500 may be far more realistic than, say, £1,000.
You should also take into account any tricky caveats; Yorkshire Building Society's instant-access cash Isa, for instance, only permits one withdrawal per year. This may not be suitable if you're likely to need to access your cash regularly.
Editor's note: This story was updated to clarify that the top AER on offer is 1.53%, and interest at 1.55%.
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.