There is a container of tech-smart new banks gnawing at the heels of determined high street rivals – and it seems some are racing ahead.
Challenger banks already browbeat This is Money’s eccentric best-buy assets tables, paying distant some-more than the parsimonious rates charity by the big banks.
Now there are a few which have brought out stream accounts too, including many recently, Monzo.
It started out as a pre-paid label permitting users to perspective sell instantly and simply keep tabs on spending. It was clearly so renouned among younger banking business that ‘golden tickets’ were given divided to be means to burst the weeks-long watchful list to get hold of one.
Here’s the This is Money outcome on the new stream comment and a comparison of how it stacks up against its competition.
Monzo: The challenger is scrapping its renouned prepaid label in April, business can now upgrade to its stream account
These app-only banks are like Marmite, many possibly adore them or can’t consider of anything worse.
The major advantage is these apps offer an present discernment on your balance.
Even if additional budgeting facilities and change updates are not your thing, there are some other perks including in-credit seductiveness and low overdraft fees as good as some essential collection such as the ability to solidify and unfreeze your label instantly.
The draw for many is the free abroad spending perk many of these apps offer, a good way to draw people in when these banks are in their infancy. But these initial offers may not be around for long, as shown by Monzo’s new top on fee-free withdrawals abroad.
Remember if you do remove your mobile you will wish to hit the bank’s patron services as shortly as probable so they can invalidate the app, nonetheless given they need a pin or thumbprint to open it’s reduction likely you’ll remove money.
The challengers watchful in the wings
Atom Bank was one of the first challengers to advantage a licence, appearing on the stage back in 2015 with plans for 5 million stream accounts by 2020.
The bank already frequently facilities in the best buy assets tables and offers a operation of mortgages.
The roll-out of its stream accounts is approaching possibly this year or next after delays reported last year.
N26 has a German banking looseness which will concede it to work stream accounts in the UK.
Its website says these are coming shortly to the UK and people can register their seductiveness for early entrance by email.
Monzo launched its prepaid cards in Mar 2016, and perceived its full banking permit in Apr last year.
The bank has started now promulgation out repel cards to those who have opted in for an upgrade to its new stream account; the existent prepaid label scheme is set to close on 4 April.
As many as 360,069 business had already sealed up for the stream comment at time of writing, as many of the new comment facilities are the same as with the prepaid card.
The app automatically categorises your spending and lets you see reports on your balance. You can also set up spending targets for any difficulty and accept notifications when you get close to that limit.
You can instantly compensate your Monzo contacts using your pin but having to enter any bank comment sum and solidify your label instantly if it’s lost.
Last Nov the bank launched its pots underline which lets you obstruct supports into apart pots to help you strech assets goals.
It doesn’t offer any seductiveness on the amounts but Monzo says in future it aims to use its marketplace to offer the option to obstruct these pots to online investment.
You compensate 0 for spending abroad but the bank caps free withdrawals on the label at £200 per month. After that you compensate 3 per cent.
Monzo has opted for prosaic rate fees instead of interest. There is a £20 aegis (a little some-more inexhaustible than the £10 many high street banks offer) and after that you compensate 50p per day it gives you until midnight before the bank starts requesting charges.
If a remuneration is about to take you over your limit, the app will send you an alert.
If you haven’t sealed up for an overdraft it will reject any payments that would drop you in to one, or any that would go over your limit. If you don’t wish an overdraft you simply set the extent to £0.
Managing your account
The app also allows you to supplement cash around a bank transfer, top up using a repel label and using Apple or Android pay.
You can hit its patron services around its discuss duty 24 hours a day, by email or by phone.
To deposition a coupon you send it by post but it now has no options to deposition cash.
When you send a remuneration it requires to use a 4 number pin. You can also set up Touch ID to login and authorize payments in the app.
You can set up location-based confidence which uses the plcae of your mobile to help mark questionable sell on your card.
Spending breakdown: Starling shows you how much you have spent around a accessible cake chart
Starling perceived its banking looseness in Jul 2016, having announced plans as distant back as Nov 2014. Its stream comment launched in May 2017.
Similarly to Monzo, the Starling comment comes with considerable budgeting features.
You can see all your scheduled payments, see a relapse of your sell any month, automatically categorised, or perspective them by merchant.
The bank has a assets goals feature. You can use this to create specific pots, set up targets and report unchanging top ups.
Funds are ring-fenced from your unchanging change so you won’t spend them, but you can send the income back and onward if you need.
Pots earn seductiveness at the same rate as your ubiquitous balance.
While it won’t be adequate to retire on, Starling also offers seductiveness on your balance. You get 0.5 per cent on balances up to £2,000 and 0.25 per cent on amounts over that.
The comment also comes with free abroad spending and cash withdrawals. Unlike Monzo there is no extent on the volume you can repel abroad but incurring fees.
Starling already appears in This is Money’s beam to the best stream accounts for overdrafts, as it relates one elementary fee.
The bank has one prosaic rate of seductiveness on both certified and unapproved borrowing, at 15 EAR per cent.
If you do go overdrawn by accident, or over an existent extent there is a £2 monthly top on overdraft interest, and it waives anything under 10p.
You won’t be charged borrowing fees unless your net change opposite all of the assets pots and your ubiquitous change falls next zero.
Managing your account
Starling supports Apple and Android Pay, and you can top up your comment by bank send or repel card.
If you wish to compensate in a coupon you have to send it by post, and cash can be deposited by NatWest, but you will need to hit Starling’s patron services first.
You can hit patron services by live chat, email or phone.
You can close your card, get a pin sign and report a label lost or stolen within the app.
You can also away switch off the label for ATM withdrawals, online payments, mobile wallet payments and contactless payments.
The app itself can be non-stop with a pin code or with a ride print. It also offers location-based rascal insurance using your smartphone’s geo-location technology.
Savings pots: B offers an trustworthy assets comment which you can use to set up assets goals
B – the app-based off-shoot of Clydesdale and Yorkshire Bank – launched back in May 2016.
Unlike Monzo and Starling there is the option of banking in bend with the primogenitor banks or at its few dedicated B branches.
Last year it charity a whopping £250 to new business to sign up, but there have been no inexhaustible cash carrots since.
Again, it tags your sell automatically into opposite categories to help you see where you cash is going, you can set up budgets to help you cut spending opposite any difficulty away and projections to envision what your change will demeanour like at the finish of the month
You can also create assets pots within the trustworthy comment to strech sold goals and unchanging involuntary payments.
The comment itself comes with in-credit seductiveness of 0.5 per cent up to £2,000, while the assets comment pays a somewhat aloft rate of 0.75 per cent, with no limit.
You can pierce cash between the two instantly and set up sweeps to top up your comment from a assets pot when you change reaches a certain limit.
You won’t wish to use the comment abroad – it charges 3.75 per cent (min £1.50) per transaction every time you repel cash abroad. If you make purchases abroad the price is 2.75 per cent (minimum £1.50).
The bank does also offer a credit label which affords fee-free spending. This works within the same app and charges seductiveness at 9.9 per cent.
You still wish to equivocate cash withdrawals on the label as this incurs a 3 per cent with a smallest of £3.
Its borrowing charges are somewhat some-more difficult than Starling and Monzo.
Any designed borrowing will cost £6 per month and 12.5 EAR per cent.
One useful feature, B offers a two-day beauty duration for you to equivocate charges and there is a £25 fee-free buffer.
You will need to watch out for random borrowing as that will time up large bills. B charges £6 per day and returned equipment cost £15.
Again, there is a two-day beauty duration to repay but the random borrowing aegis is only £10. B caps fees at £100 per month.
Managing your account
You can pronounce to patron services by phone or email or by a live web chat.
You can compensate in cheques by holding a picture using your smartphone camera within the app or in branch.
You can also use its branches to compensate in cash and cheques. You record in using a pincode or thumbprint but there is no underline to solidify your card.
Revolut – the digital wallet that looks like a stream account
Revolut lets you apart the check with friends and make abroad transfers at nearby ideal rates
There is a handful of new companies charity prepaid cards or accounts which demeanour and act in much the same way as a normal stream account.
This is Money has created about some in the past including Loot and U, but Revolut is one of the best known.
The major disproportion is that while they are regulated by the Financial Conduct Authority, it is under Electronic Money Regulations. This means that your income isn’t covered by the FSCS. Instead, patron supports must be ring-fenced in a apart comment with another bank.
Should something go wrong this means your cash should be safe. However it won’t strengthen you if the bank where the ring-fenced supports are kept goes bust.
In the case of Revolut, client supports are stored under a segregated comment with Lloyds Bank.
Revolut has two ‘bank account’ options – a free chronicle and reward chronicle costing £6.99 per month.
Similar to the likes of Monzo and Starling Bank, accounts can be non-stop around its app and offer perks including fee-free spending and withdrawals abroad (up to £200 or £400 per month depending on which comment you have).
The app categorises your sell and lets you send income instantly using mobile numbers.
A singular perk is that users can send income to 120 opposite countries but loading the sell rate.
The provider recently launched a pay-per-day transport insurance policy and it has also branched out into cryptocurrency trading, device insurance and loans.
Verdict – online stream accounts
Andrew Hagger, of Moneycomms, says: ‘I utterly like the new online banks – Starling, Monzo and B – they all offer the simple ability to set up approach debits, station orders and use Faster payments and the FSCS pledge up to £85,000.
‘However that’s where the similarities finish – they are distant some-more neat and flexible and offer additional budgeting collection and insights into your spending habits – not a must have for many but will positively help some people conduct their income some-more effectively.
‘Starling and Monzo will advantage from open banking relations in the coming months and years, forging relations with online debt and investment providers and this will be an area where these new banks will be means to drive income from referrals and sign ups of additional products.
‘B offers the advantage of a bend network should you have any cheques or cash to compensate in. With Starling there is a PO box residence to post cheques to (not ideal) but then again cheques are reduction common these days.
‘These banks offer something opposite compared to the out-of-date high street banks with their infrequently dangerous record – either they will win much business from the big 5 will apparently take time, but it would be engaging to see their switching total reported.’
TSB’s Classic Plus account will compensate you 3% seductiveness on up to £1,500 and up to £10-a-month if you say two approach debits and make 20 repel label payments any month (until Dec 2018). You must compensate in £500 a month.
First Direct frequently tops polls for patron service. Its First Account offers £125 for joining and has a £250 interest-free overdraft. It also now pays cashback for spending with certain retailers. You must compensate in £1,000 or compensate a £10 monthly fee.
Santander’s 123 account pays 1.5% seductiveness on balances up to £20,000 and also gives 1 to 3% cashback on bills. You need to compensate a £5 a month fee, compensate in £500 a month and have two active approach debits.
Natwest pays £125 cash if you switch to the bank. Plus you get 2% cashback on domicile bills with its Reward Account. Requires a £1,500 per month deposit.
MS Bank’s stream account has a £125 present label for joining, and you get an additional £5 a month top up for the year. It has a £100 fee-free overdraft and no miniumum deposition criteria.
Read the full best bank accounts round-up