Monzo announces range of savings accounts that pay interest - but you can get higher rates directly with its partner

21 March 2019
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Banking app Monzo has announced a partnership with savings provider OakNorth to offer interest-paying savings accounts to customers

However, several of the accounts offer lower rates than their equivalent if you go direct to the savings provider.

Currently on the app you can save money using “savings pots” but these don’t offer any interest on your deposits – making them a poor choice for anything other than short-term budgeting as your savings will be losing value against inflation.

From Monday 25 March however, Monzo customers will be given access to a range of account options that will pay interest on their money. These are:

  • An easy-access account offering 1% AER
  • A personal easy-access Cash Isa offering 1.14% AER
  • A six-month fixed term account offering 1.36% AER
  • A personal 12-month fixed rate Cash Isa offering 1.38% AER
  • A nine-month fixed term account offering 1.46% AER
  • A 12-month fixed term account offering 1.53% AER

The minimum deposit for these accounts will be £500, with a maximum of £20,000 for Isas and £500,000 for normal savings accounts.

Tom Blomfield, co-founder and chief executive of Monzo, says: “Isas and higher interest rates on savings are something our customers have been asking for, so we’re really excited to be launching them in time for the end of this tax year.”

How these accounts compare

Monzo is partnering with challenger savings provider OakNorth. However, Moneywise has found if you save directly with OakNorth and other savings banks, rather than through Monzo, you’ll get a better rate for your cash.

Here’s how the rates compare:

  • A personal easy-access Cash Isa offering 1.14% AER

The current top easy-access Isa comes from OakNorth and pays 1.46%. If you get the same account directly from OakNorth instead of via Monzo, you’ll get 0.32% more interest for your money.

  • A personal 12-month fixed rate Cash Isa offering 1.38% AER

The top one-year Cash Isa currently comes from Shawbrook Bank and pays 1.77%, 0.39% higher. £1,000 minimum deposit.

  • An easy-access account offering 1% AER

Marcus By Goldman Sachs offers a rate of 1.5% for its easy access savings account, 0.5% more. No minimum deposit. 

  • A six-month fixed term account offering 1.36% AER

OakNorth offers a six-month bond which if you take out directly instead of via Monzo will pay you 1.76%, 0.4% higher. £1,000 minimum deposit.

  • A nine-month fixed term account offering 1.46% AER

OakNorth also offers a nine-month bond for 1.86%, also 0.4% higher than through Monzo. £1,000 minimum deposit.

  • A 12-month fixed term account offering 1.53% AER

Al Rayan Bank offers a rate of 2.17%, 0.64% higher than Monzo’s offering. Note however, Al Rayan offer EPR instead of interest. £1,000 minimum deposit.

Moneywise verdict

Monzo's new offering is great if you want a minimum fuss way to earn some interest on your cash deposits.

The accounts also offer a lower minimum deposit than if you go direct to OakNorth or others which requires a £1,000 minimum. 

However, if you want to get the most out of your savings, there are better-value options out there.

For regular updates on the best rates, Moneywise keeps up-to-date best-buy guides on Cash Isas and savings accounts

Find out more here.

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