Monzo launches interest-earning savings accounts
Well, you have to admire a staggered PR plan. Monzo, the U.K. challenger bank that just announced 85 million in Series E funding and its entrance into the fintech unicorn club, is rolling out a new feature today. The banking upstart is adding interest-earning savings accounts as an upgrade to its existing "Pots" functionality that launched last November.
The new "Savings Pots" feature is being offered in partnership with third party bank Investec Corporate & Investment Banking and lets you earn 1 percent interest on the money you specifically allocate to a Savings Pot. It is the first time Monzo customers have been able to earn interest on their savings through the Monzo app, and is part of a wider "marketplace banking" strategy that will see Monzo increasingly offer various financial products via third party fintech startups or incumbent providers.
The idea behind Pots is to let you set money aside for specific things, such as a planned holiday, preparing for Christmas, or simply saving for a rainy day. You can create up to 10 Pots, each with their own name, and then add money to them manually, schedule payments in and out, or round up your day-to-day transactions to the nearest pound and add the additional change to a Pot, piggybank style.
To that end, you'll need a minimum of 1,000 to open a Savings Pot, and above this can put as much money as you want in a Savings Pot. The savings accounts are flexible, so you can take money out of your Savings Pots at any time, where it will arrive back in your main Monzo account the next working day. Investec will hold the money in your Savings Pots and pay the 1 percent interest.
Savings Pots are covered by the Financial Services Compensation Scheme (FSCS), meaning up to 85,000 of customers' savings are protected (i.e. 85,000 across all of your Savings Pots as well as any other money you've deposited with Investec). Money you have banked with Monzo outside of Savings Pots is protected by the FSCS separately, again up to 85,000.
Monzo says it will be gradually rolling the feature out to its more than one million customers, and that the bank will email customers once they're able to start using Savings Pots. I had the feature from yesterday and it is pretty self-explanatory to use.