How does Monzo work

Monzo is one of the largest and most current baking providers to emerge from the 2010’s. They’re a totally online banking company and have created a user-friendly app to enable their customers to save money and manage their accounts with ease. The question is, what are the best ways you can save money with Monzo

In this guide, we’re going to take you through some of the ways Monzo have made, not just saving, but banking incredibly easy. 

Savings Pots 

Saving money with Monzo couldn’t be easier. They use savings pots to help you put money aside for a number of things, including houses, holidays and general savings. You can name the pots what you like so you can fully split out your savings. They can be opened in a matter of minutes so you can get saving instantly. 

They also use pots for a number of useful savings features like round-ups. Every time you spend money, you can add the spare change to a savings pot and watch your savings grow without even noticing. For example, if you spend £10.71, Monzo will add £0.29 to a savings pot. You can slowly find yourself building up a nice sum of money which you can then add into another savings pot after a month.

If you want help not touching the funds in the pot, you can also lock the account. This means you can’t take money out of the pot but you can add money. A timer can be set for when the pot opens again. This is ideal if you’re saving up for a holiday. 

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Like most banks, Monzo do offer an overdraft service if you’re finding cash is a little tight. You’ll be set an arranged overdraft limit of, for example, £1000. Their overdraft limit goes up to £3000. 

Monzo have provided a representative example. For example, if you use an arranged overdraft of £1,200 for 30 days, with 19% EAR/APR (variable), it would cost you £17.28. Your exact rate will depend on your credit score, and you can see what rate you’re on in your Monzo app. Take a look at the Monzo Overdraft Calculator to work out what you could get and what you could expect to pay. 

What are EAR and APR?

Explaining EAR: EAR stands for “Effective Annual Rate”. Essentially, this is the rate of interest you’ll pay if you’re overdrawn for a year. The interest you pay will be based on the amount you’re overdrawn by. The interest builds up over time from being overdrawn. So the less you use your overdraft, the less you’ll be charged. This doesn’t include other fees such as hidden or late fees which Monzo don’t charge anyway. 

Explaining APR: APR stands for “Annual Percentage Rate” and is calculated in the same way as EAR. So essentially, EAR and APR are the same. 


From buying a car to renovating your home or paying for a wedding, Monzo offer a range of personal loans. They have a representative APR of 3.7% of loans between £7500-£15,000. On loans of up to £7500 there’s an APR of 19.5%. 

They have flexible repayments and you can choose a repayment date that suits you. You can also change the date if you need to without being charged a fee. If you want to repay your loan off early, you can pay off your loan early or make extra repayments if you need to. Once you’ve applied for your loan, it will also land on the same day. 

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Contacting Monzo

If you want to get in touch with Monzo about any of their services, then you can use the Monzo contact number to speak directly to one of their team. They’ll be more than happy to explain any of their services and help you set up an account if wanted.