NOTE: February 2018. From April 2018, the Monzo pre paid card will cease to exist and the only alternative is to open a current account with the bank. There will still be no charges abroad for using the new debit card, but ATM withdrawals will only be free for up to £200 a month.
Do you want to avoid all those annoying foreign use charges on your debit and credit cards? I have been won over by Monzo.
As most of our friends know, my husband and I are not at the forefront of the technological revolution. However, anyone can be converted, especially if one saves money in the process, and I have been converted by the Monzo card.
Not only is this card free and comes in a strikingly bright, almost florescent orange, which is very easy to find in the wallet, but it charges no fees for foreign transactions whatsoever.
As most of you will know, there are high charges for using credit and debit cards abroad. Visa charges a 2.75% non sterling transaction fee and it can cost up to £1.75 to use an ATM. Debit cards have the non sterling transaction fee and will then charge £1-1.50 per use.
How it works
Monzo is one of the new wave of smart banks and the Monzo card basically uses the Mastercard system, so can be used anywhere that takes Mastercard. It is managed solely through an app on your smartphone and works as a pre-paid debit card. It is also contactless.
When applying, I had to the send photos of my I.D. and then speak the immortal words on video: ‘Hello, my name is Zara. I would like a Monzo card’. 2 days later the card duly arrived, I verified it, and off I went.
The initial loading on application was £100. One of the card’s greatest advantages is that you can top up instantly using a debit card on a current account, so it is not necessary to pre load a card with foreign currency at possibly bad exchange rates, but to just top up as needed.
The app displays the balance and each transaction almost instantly. These have amusing little logos, such as a bunch of bananas for a supermarket payment – I know, but we haven’t got much beyond a smiley face as yet!
Some Advantages
As it is so easy to top up, it also means you do not have to load the card with large amounts. Mastercard also uses a near perfect exchange rate, usually better than that of Visa or Amex. The balance left over can be used up at home too.
If it gets lost you are able to block the card yourself (unless your phone is stolen at the same time – one of the disadvantages!) and you can unfreeze it again. I am not speaking from experience here,but could this be a useful card for one’s children!? Think of the bribery potential – ‘Behave or I will freeze your Monzo card’!
Monzo say they can send out a replacement card the same day and there is a help line. If you do lose your phone, it is possible to do a bank transfer though obviously this would be slower.
The only thing to be aware of is using it at the unmanned petrol stations in France, which is the only country I have used it in so far. When you put your card in, they pre-approve €100 euros – and this is what shows up initially on the card, even though you might fill up with less than that. They then hold the money on the pending bill so you suddenly find you have less spending money than you thought. We discovered this on a Saturday and it was not corrected until the Tuesday.
Some Limits
For the big spenders amongst you, there is a limit of £5000 per month top up. ATM use is restricted to £250 a day, £1000 a month or £3000 a year. So how does Monzo actually make money? Apparently, there are bank accounts in the offing, for which they will no doubt have a large reservoir of Monzo users to draw on. It is certainly worth keeping an eye on developments.
So next time you are thinking of paying a deposit on a foreign hotel, or thinking of travelling, think of saving yourself all those rip off foreign use charges and think Monzo. If an idiot like me can make it work, anyone can!