Wise vs Monzo: Which Online Bank Is The Best?
Mobile banking and transferring money online have never been more convenient. Two popular online banking and international money transfer services are Wise and Monzo. Both offer a range of services customers can use via their mobile apps.
Wise is essentially an online account that enables you to send money overseas and get paid in different currencies. You can also use the Wise card to spend abroad. In contrast, Monzo is a fully-fledged digital bank.
However, how do you choose between the two?
Below we’ll look at their prices and features to help you answer that question. There’s lots to cover, so let’s make a start.
Wise vs Monzo: About Wise
Wise, formerly known as TransferWise, is at heart, not a bank. Used by 13 million people, it’s a fintech company that allows you to:
- Open an account to send money overseas
- Get paid in multiple currencies
- Use the Wise card to withdraw and spend abroad. The FCA (Financial Conduct Authority) regulates it in the UK.
Launched in 2011 in London, Wise partners with various online banks, including Monzo and N26, to offer account holders cheap currency transfers. The Wise website has a handy foreign currency converter calculator. You simply put in how much you want to transfer and choose the currency you’re transferring overseas. Then Wise uses the mid-market currency exchange rate with no markup fee. Instead, costs are based upon:
- The amount you send
- The currency you’re sending money to
- Your chosen payment method
Wise vs Monzo: About Monzo Bank
Also based in the UK is Monzo. Launched in 2015, it has over five million customers and offers a range of personal and business banking products. It’s an app-based service emphasizing transparency, so customers are never surprised by hidden fees.
In total, it offers six accounts:
- Current account
- Plus account
- Premium account
- Business account
- Joint account
- Age 16-17 account
This review focuses on Monzo’s current account. Although some Monzo features and functions are available to US customers, it’s primarily aimed at the British market.
Monzo offers a full range of mobile banking features to simplify your banking and savings efforts. For instance, you can keep tabs on your savings targets, create budgets, and use Monzo’s cost-effective international transfers and ATM withdrawals.
A new feature that may interest potential Monzo customers is Monzo Borrowing. We’ll go into this in more detail in the pricing section below.
Wise vs Monzo: Wise Prices and Features Overview
Given that Wise differs from Monzo in that it’s not a bank, it’s not surprising that its fees are different too. In addition, Wise split its offer into personal and business accounts. So let’s start with the Personal accounts.
With a Personal account, there are four categories of actions you can perform:
Send Money: Prices start at 0.41% to transfer money overseas. Wise states it’s 8x cheaper than leading UK high street banks on average. You can send money with Wise by bank transfer (from your bank account via Wise), debit card, or credit card. Wise accepts Visa, Mastercard, and some Maestro cards.
You can also transfer/send money using a PISP (Payment Initiation Service Provider). You instruct Wise to make a bank transfer directly from your bank account. That way, you don’t need to leave the Wise app and log into your online bank separately. It’s as cheap as a manual bank transfer, but not all banks support it yet.
You can also use SWIFT, but your bank may charge a fee. Lastly, you can use Apple Pay if it’s enabled on your phone.
Receive and Add Money: You can receive money in AUD, CAD, EUR, GBP, HUF, NZD, RON, SGD, TRY, and USD (non-wire) for free, but USD wire payments cost 4.14 USD.
Use the Wise debit card, spend abroad, and get cash out overseas: The Wise debit card costs £5. If you withdraw more than £200 a month, you’re charged 1.5% of the withdrawal and 0.50GBP per withdrawal. You can withdraw up to £200 a month for free but only in two or fewer withdrawals. You can use the Wise card in 200 countries. When using the card overseas, if you have the local currency in your Wise account, this is used automatically. However, if you don’t, Wise will convert the money at the real rate for a small foreign transaction fee of 0.35%.
Hold money in a multi currency account: It’s free to hold up to 50+ currencies in your Wise account, but you’re charged 0.07% per month on more than £3,000. Below £3,000, it’s free. In addition, you can keep track of any money you send/receive while it’s in transit. Lastly, personal account holders can set up recurring payments such as direct debits.
Wise also offers a Business account. This can be used to pay employees in multiple significant currencies, manage cash flow overseas, create invoices, and connect Wise to your accounting software. It’s aimed at eCommerce stores collecting payments from overseas customers, freelancers with clients abroad, and people working overseas who want to transfer money to their home country.
Businesses can send out automated mass payments to up to 1,000 international employees. But, first, they must upload a spreadsheet with all the necessary currency and invoice information. After that, Wise does the rest.
If you run a business, you can register employees to your account. This makes managing their company-paid expenses much more straightforward. You can also manage your cash flow with this account by using the Wise transaction filter to view transactions per team member. You can also set spending limits and download statements to keep for your records.
Lastly, Wise has a new feature called:
Assets: Here, you can switch the money in your Wise account for stocks, which invest in the world’s 1,500 most prominent companies, such as Google, Tesla, and Apple. This invests in the iShares World Equity Fund, which has had an average growth of 13.39% a year since 2012. The fund is in EUR, and returns can vary by currency. Using this feature doesn’t mean you can’t access your money; your funds just sit in stocks. As for fees, there are two totaling 0.55% a year (Fund Fee 0.15% and Wise Fee 0.40%). In addition, there are no trading fees or minimum hold fees.
Wise vs Monzo: Monzo Prices and Features Overview
As we’ve already said, for this review, we’ll focus on Monzo’s current personal account prices. Within this category, there are three current accounts you can open:
Monzo: This is a free account, but you’re charged a 3% fee if you withdraw more than £200 a month abroad. You’re also charged £1 when you deposit money into your account via one of Monzo’s 28,000 UK pay points.
Monzo Plus: This will set you back £5 a month. For this, you get up to £400 fee-free overseas withdrawals, 1% interest on your balance up to £2,000, and a:
- Hologram card
- A credit tracker
- You can view multiple Monzo accounts from the Monzo app
- Separate your payments into different categories to easily see where your money is going
- One free cash deposit a month
Please note: There’s a three-month minimum term attached to this account.
Monzo Premium: This costs £15 a month. You get the same features as Monzo Plus, except you can withdraw up to £600 monthly and make up to five free cash deposits. You also receive 1.5% interest on your balance up to £2,000, worldwide travel insurance, mobile phone insurance, discounted airport lounge access, and a good-quality metal card.
In other words, the more you pay, the more features you unlock.
With that said, let’s turn our attention to other aspects of Monzo that may be of interest:
Monzo Borrowing: If you’re eligible, you can get an overdraft of up to £1,000, with 19%, 29%, or 39% EAR, depending on your credit score, which you can see within Monzo’s app. You can also borrow money with no early payback fees. Loans of up to £10,000 come with an APR of 23.9%, and for more than £10,000, it’s 8.9%.
Monzo Flex: This isn’t a credit card but rather the option to spread the cost of payments over a set period of time. If you’re eligible, you can spread your payments interest-free over three installments or take your time with 6 or 12 installments at 19% APR representative (variable).
Traveling with Monzo: You can use your Monzo card anywhere in the world. Monzo doesn’t add any fees to the exchange rate. Likewise, Monzo extends Mastercard’s exchange rate to you with no added transfer fees or charges. So, suppose you want to withdraw cash abroad in the EEA (European Economic Area). In that case, it’s free to do so if you have Monzo as your primary bank account or have Monzo Plus or Premium. You’ll be charged 3% on withdrawals over £250 every 30 days if not.
If you want to withdraw money outside the EEA, you can withdraw up to £200 with no fee, but only every 30 days. After that, you’ll be charged 3%. If you have Monzo Plus, it’s £400 for free every 30 days and £600 for Monzo Premium. Again, charges are 3% for amounts breaching these thresholds.
Wise vs Monzo: Security
Wise is regulated by the FCA (Financial Conduct Authority). It has a dedicated fraud team to keep accounts and money protected, and users receive instant notifications each time they use their Wise card. In addition, Wise uses two-factor 3D secure authentication and allows you to report security vulnerabilities via its bug program, BugCrowd.
In contrast, Monzo became a bank in 2017. This means the FSCS (financial services compensation scheme) protects your money for up to £85,000. It’s a government-backed scheme that aims to protect its citizens’ money should the bank go bankrupt.
Additional Monzo security includes instant notifications when you make a payment, touch ID, face ID, PIN, or fingerprint approval for online payments. In addition, you can block or unblock your card, and instead of using passwords that can be hacked, Monzo sends you email links to log into the app instead.
Wise vs Monzo: Customer Service
Wise offers an online help center where you can type your query into a search bar to locate answers to popular questions. For instance, account management, Wise’s card, sending money, etc. There’s also a customer support team, but you need to be logged in to reach them via phone, email, Facebook Messenger, Twitter, or Whatsapp support.
Monzo also offers online self-help support on topics like account management, making a mobile payment, obtaining an overdraft, etc. You can also use its online forum to post questions. Plus, there are UK and overseas contact numbers. Lastly, you can use the live chat option via the Monzo app.
Wise vs Monzo: Monzo Pros and Cons
Let’s start with the positives:
- Monzo is registered with the financial conduct authority (FCA) to offer deposit protection
- Earn interest (albeit minimal) on your savings
- The budget tracker with the paid accounts is convenient for monitoring your financial life.
- The app is easy to use
- There’s a £1 fee each time you deposit cash
- The £200 monthly withdrawal limit when you’re overseas seems insufficient
- You only earn interest on balances up to £2,000
Wise vs Monzo: Wise Pros and Cons
Again, let’s start with the good news:
- You get access to a handy money transfer calculator, so you’ll know precisely what you’ll get for your money
- You benefit from real-time currency conversion rates
- Wise is FCA regulated
- It’s free to register
- Its primary function is to send money overseas. So you don’t get some of the added benefits of online banking platforms, such as budgeting tools and other perks.
Interested in Wise or Monzo?
As these two services focus on slightly different things, perhaps you can see the value in using both?
For example, Wise offers excellent exchange rates to multiple countries. On the other hand, Monzo is more of a bank. As such, it comes with some of the perks offered by traditional banks, such as insurance.
Both platforms take security and transparency seriously and are simple to use online. It’s equally easy on both platforms to view how much sending funds abroad will cost you.
Wise is great if you’re traveling or working overseas, and its charges are minimal or, in some instances, free. In contrast, Monzo is much more a UK-based operation.
Wise is less of a bank in the traditional sense (online or otherwise), and its main focus is on being able to make transactions between and in other countries.
If you choose to sign up for either Wise or Monzo, let us know your thoughts. You may, of course, be thinking about some of their competitors, such as Revolut or N26. Either way, tell us about your experiences in the comments below!