Best App-based banks and digital online bank accounts

Your mobile device contains the banking of the future. We know all about the top banks with mobile App-based banks and how they operate.

Online-only banks, digital banks, mobile banks, and challenger banks are other terms frequently used to describe app-based banks. These brand-new financial services, which vary from cryptocurrency to current accounts, are only available through your smartphone.

Many of the services they provide, particularly currency exchange, are far less expensive than accounts with traditional banks.

The top banking App-based banks in the UK have been assessed. Find out which banks can best help you save money, create a budget, and even begin trading stocks.

What are app-based banks?

Banks online only exist in digital form, mostly on App-based banks. Banks like Monzo and Starling Bank are two examples (more on these later).

Unlike conventional banks, these institutions don’t have any physical locations that customers may visit. The App-based banks will still let you access customer service and guidance. Additionally, a real debit card, a sort code, and an account number will still arrive in the mail.

You may set up direct debits, transfer funds, and pay bills with digital banking just like you would with a regular bank account.

Although there are fees for premium items, the finest online banks provide for free registration.

The UK government’s implementation of “open banking” led to the rise of App-based banks. Banks must now permit consumers to exchange financial information with other banks or budgeting applications, such as spending patterns, recurring payments, bank statements, etc.

Why choose an online bank over a traditional bank?

An increasing number of people are deciding to register a bank account using an App-based banks in order to have more control over their finances.

At this point, it appears that the majority of users of banking applications combine them with ‘conventional’ accounts.

There are no restrictions on the number of current accounts you may hold. So you don’t need to completely switch.

App-based banks advertise cutting-edge digital banking technologies and provide services that you most likely won’t find at your traditional bank.

Benefits of online banking

These are the best features you can get with free online bank accounts:

1. Real-time notifications direct to your phone each time you spend money
2. Budgeting tools that help you to set spending goals and over-spending alerts
3. Fee-free overseas spending
4. Auto-saving features which regularly set aside money in separate pots
5. Fast in-app card cancellation
6. In-credit interest (in some cases).

All banking App-based banks are positioned slightly differently and each excels in specific areas, which we explore in our reviews below.

Is online banking safe?

Many consumers still have their doubts about keeping their money in an App-based banks that uses internet banking. What occurs if the firm fails? Will you lose every penny you have?

The Financial Services Compensation Scheme (FSCS) offers protection to all app-based banks with full banking licences, including Starling Bank, Monzo, and Atom Bank. In the event that the bank fails, your money (up to £85,000) is safeguarded.

While Revolut and Monese are protected by the Financial Conduct Authority (FCA), they do not yet possess UK banking licences and are thus not covered by the FSCS.

In reality, the App-based banks firm links with a licenced bank where your money is kept fully separate.

This indicates that you will receive a full refund if one of these applications fails. Your money might not be safeguarded, though, if the larger bank that was used to keep it fails.

Online bank reviews

Current account features

Revolut and Starling are quite comparable, although Revolut does not presently hold a UK bank licence, therefore it is unable to provide overdrafts or FSCS protection. However, Revolut is subject to Financial Conduct Authority (FCA) regulation, and your money is safe in segregated accounts with authorised institutions.

Some of Revolut’s best features are:

• 3 months free premium when you sign up through our unique link
• Note: a card delivery charge will apply if you don’t continue with premium after the trial
• Real-time notifications
• Simple analytics to track spending habits
• Instantly freeze/unfreeze cards
• Turn off online, ATM and contactless payments
• Savings vaults with up to 1.35% AER on GBP
• Spend and send money abroad with no fees
• Use the app to buy and exchange cryptocurrency
• Split the bill function (even if they don’t have the app)
• Set up recurring payments
• Revolut Perks including cashback or discount offers
• Free debit card (delivery fee applies)
• Open Banking allows you to view and manage all your bank accounts via the Revolut app.

These are the things to watch out for with Revolut:

• Revolut are covered by the FCA but not the FSCS.
• You can only withdraw £200 cash for free each month or make five withdrawals (whichever one comes first) on the Standard plan – after that, you’ll be charged 2% on all ATM withdrawals, with a £1 minimum fee.
• If you want more features, higher withdrawal limits, and better rates on cryptocurrencies and precious metals, you can upgrade to the Revolut Plus, Premium, or Metal plans. But keep in mind that these come with a monthly fee.

Buy and exchange cryptocurrency

The fact that Revolut makes trading cryptocurrency so simple is one of its key selling points App-based banks.

Check out our Bitcoin guide for all the fundamentals, such as how to get started and determine risk, if you’re new to cryptocurrency.

With Revolut, you may convert any of the 30+ fiat currencies it supports into Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Ripple, and other cryptocurrencies App-based banks. For Standard, Plus, and Metal customers, there is a 2.5% cost, and for Premium and Metal users, there is a 1.5% fee (the fee is factored into the exchange rate).

The software allows you to track cryptocurrency exchange rates in real-time and get price notifications sent directly to your phone. You may also establish target prices so that when your cryptocurrency hits that price, it will immediately be traded App-based banks.

But be aware that neither the FSCS nor the FCA provide protection for the cryptocurrency functionality.

Create Vaults

The way that Revolut’s Vaults operate is quite similar to the ways that Starling’s Spaces and Monzo’s Pots do. They are simple to set up and may be used as a quick and simple approach to save money.

You may either set up weekly or monthly regular payments, or you can round up purchases to the closest pound and keep the difference. You may even give them names to increase your motivation to start saving.

Send and spend money abroad for free

Revolut utilises the interbank wholesale exchange rate, which banks use to conduct business among themselves, in contrast to many banks that tack on significant fees. The App-based banks allows Standard or Plus users to send up to £1,000 at this rate each month; transactions that exceed this cap are subject to a tiny 0.5% charge.

With Revolut, making international purchases is a little different. When sending money in euros inside the SEPA zone, there are no transfer fees. Depending on where you’re sending the money, there may be a cost for payments to non-Revolut users outside the SEPA zone. Here, you may estimate the costs before choosing. Users of Premium and Metal get a discount on these.

Once more, a 0.5% fee will be App-based banks applied to any monthly expenditure above £1,000 (unless you upgrade to a Premium or Metal plan).

Starling Bank

Current account features

The best choice for a comprehensive current account that makes advantage of digital banking is Starling Bank. Their accounts provide several different characteristics, such as in-credit interest, overdrafts, savings objectives, and fee-free international spending.

The major characteristics of Starling Bank accounts are listed below in brief:

• Real-time notifications on your phone as you spend.
• Insights into your spending habits.
• Savings Spaces which you can set and monitor.
• Round up transactions to the nearest pound, with the spare change automatically put into your savings.
• Lock and unlock your card in-App-based banks.
• Turn off certain spending functions, e.g. online spending or contactless payments.
• Free cash deposits up to £1,000 per calendar year into your personal or joint account via any Post Office. Anything over the limit will be charged at 0.7%.
• 24/7 in-App-based banks customer support.
• ‘Settle Up’, which allows you to get paid back or split the bill in seconds.
• No extra charges for spending abroad.
• 0.05% in-credit interest.
• Allow joint accounts.

Things to watch out for:

• You’ll be charged for using an overdraft (fees are made clear)
• Maximum six cash withdrawals a day, up to £300.

Earning interest

The interest given on accounts stored with Starling Bank is a significant factor in setting them apart from the competition.

This isn’t a horrible bargain because most current accounts don’t give any interest at all. Up to £85,000 in balances will earn you 0.05% AER.

Behind all the financial lingo, this essentially implies that using Starling will result in you generating money, unlike the majority of other App-based banks.

Overdraft

Starling Bank does provide an overdraft facility (subject to approval), however depending on your credit score, you’ll pay 15%, 25%, or 35% EAR (varying). Although students are eligible to apply, there is currently no overdraft that is just for students; instead, it is preferable to obtain a 0% interest overdraft from one of the top student bank accounts (which you may move across).

As soon as you launch the App-based banks, you may submit an overdraft application. You can select the overdraft amount (up to £5,000) if you are authorised. In order to prevent yourself from using the entire overdraft simply because it is there, it is important to carefully determine how much overdraft you truly need within that maximum amount.

Daily interest is accumulated and charged to your account on the 15th of the next month, however the App-based banks will make this information abundantly obvious. As an illustration, the cost of a £100 loan for 30 days at 15% would be £1.16.

Before granting you an overdraft, Starling Bank will verify your credit (but not if you’re simply starting an account).

Spending abroad

One of the finest online banks for utilising overseas is Starling Bank since you won’t be charged to use your debit card there or to withdraw cash from an ATM (although keep in mind that particular ATMs may have their own fees).

You won’t be charged for the card or for topping it up, and it utilises Mastercard’s exchange rates (without any additional costs). Check out our other best advice for reducing your travel expenses.

Joint account

One of the few digital App-based banks that allows anybody to create a shared account is Starling.

These are fantastic if you share financial obligations with a spouse or acquaintance. For example, if you live together and want a joint account for paying bills.

It only takes a few minutes to set up once you are both on Starling. After that, you’ll be able to contribute and spend money together. If you wish to spread the costs among more individuals in a home share, Starling joint accounts are only for a maximum of two people, so they won’t work.

Chase

Current account features

One of the largest banks in the United States, Chase, has just expanded to the United Kingdom.

The main distinction is that Chase is a bank that exclusively has its own App-based banks; no physical branches will be opening up in your community. You still receive FSCS protection on up to £85,000 in your account because it is still a bank.

The highlights of Chase’s bank account are as follows:

• 1% cashback on almost all purchases in the first year
• A linked savings account with a 1.5% variable interest rate
• 5% variable interest on ’round up’ savings in the first year
• No extra charges for spending abroad
• A numberless debit card which keeps your details safe if you lose it (although they are all accessible in the App-based banks)
• Spending insights and budgeting tips in the App-based banks
• Card controls so you can decide how and where it’s used (e.g. freeze contactless or gambling payments)
• 24/7 customer support is available through the App-based banks.

Things to watch out for:

• You’re currently unable to deposit cash or cheques into your Chase account
• Despite being a registered bank, Chase doesn’t offer overdrafts
• App-based banks isn’t yet available on all phones.

1.5% on savings and 5% on ’round ups’

You will have exclusive access to the linked savings account if you have a Chase current account. This is the greatest easy-access savings account available because to its variable interest rate of 1.5% AER.

However, you may increase the interest you receive on your ’round up’ funds.

When you turn on this App-based banks function, all of your purchases are automatically rounded to the closest entire pound. Chase will give you 5% AER interest (calculated daily and paid monthly) on the difference, which will be saved.

This money is there for you to spend whenever you choose. However, it’s okay if you’d want to leave things alone for the time being. Just keep in mind that after a year, Chase will automatically move the sum to your current account.

1% cashback on spending

Chase doesn’t need you to completely change your App-based banks account, but the 1% cashback offer makes it a viable option for daily purchases.

For the first year you hold a Chase current account, you will get 1% of pretty much every purchase reimbursed. All of your regular daily expenditures, including groceries and even flights, are eligible. There are just a few payment options that are not accepted (mentioned on Chase’s website).

There is no reason why you shouldn’t use Chase as your primary account for making purchases as this is the exact essence of free money.

Spending abroad

One of the top banks for international transactions is Chase. There are zero fees associated with using your card abroad, and any purchases you make will be converted at the current Mastercard exchange rate without any additional costs.

Additionally, there are no fees associated with cash withdrawals abroad, barring any fees that a local bank may apply. You should be aware that Chase only permits withdrawals from ATMs of up to £500 per day (in the UK or overseas), with a maximum of £1,500 per calendar month if you’re outside of the UK App-based banks.

Monzo

Current account features

In terms of how it is set up and the tools it provides for managing your money, Monzo is very similar to Starling Bank.

It was once a prepaid card. However, individuals now have their own current accounts with sort codes and account numbers thanks to the bank’s metamorphosis into a fully licenced institution in 2017.

With the exception of the ability to set up Direct Debits and apply for an overdraft, the App-based banks and card still function largely in the same way.

Here are some of Monzo’s main features:

• Real-time notifications whenever you spend
• Savings Pots that set money aside by rounding up every purchase you make
• Various savings accounts and ISAs for long-term savings, with interest rates of up to 1.85% AER (not all accounts are available at all times)
• ‘Easy Access Savings Pots’ accounts for short-term savings with an interest rate up to 1.35% AER (but some Savings Pots aren’t available at all times)
• Set budget spending targets for everything from groceries to eating out (and notifications if you’re going over budget)
• Easily split the bill with friends
• Create a shared tab with friends when on a night out or with your housemates to keep track of how much everybody owes you
• ‘Get Paid Early’ salary advance feature
• Free spending abroad
• ATM withdrawals within the EEA are fee-free, and you can withdraw £200 per month in other countries without paying any extra fees
• Monzo does Joint Accounts too (but you both have to have your own separate account to apply).

Things to watch out for:

• You can only withdraw £400 a day, up to £5,500 a month
• There are charges for withdrawing more than £200 per month in certain countries (see below)
• You’ll be charged interest for using an overdraft
• Monzo has Plus and Premium accounts, but we recommend sticking with the free version due to the monthly fees and limited extra features.

Savings pots

Customers may lay money away and save money with the aid of Monzo Pots App-based banks. You may add a unique image while creating a new pot, which just takes a few seconds. You could, for instance, establish a pot called “Trip to Spain” and upload a photo of a lovely sunny beach if you were saving cash for a vacation.

You cannot spend money that is in a pot, and it won’t show up in your available balance. But if you run out of money, it’s simple to move money from your savings accounts App-based banks into your current account so you may spend it again.

If you name a pot “Coin Jar” and create a new pot, Monzo will automatically round up any purchases that are more than £1 and contribute the difference to the pot. Therefore, Monzo will round up your lunch purchase to the next fiver and contribute the extra 75p to your Coin Jar pot if it costs £4.25.

Additionally, Monzo has entered the markets for cash ISAs and savings accounts. ‘Fixed deposits Pots’ provide fixed interest rates up to 2.65% AER and can be utilised for long-term deposits of £500 or more. The “Easy Access Savings Pots” (including the Cash ISA alternatives) provide you up to 1.35% AER, making them a good choice for short-term savings objectives. But not every account is always accessible.

Both of these choices, as opposed to normal “pots,” which let you set money away without generating interest, are offered in collaboration with other UK App-based banks and are true savings accounts.

Spending abroad

Spending abroad is absolutely free with Monzo. They don’t tack on any extra fees and instead utilise Mastercard’s exchange rate.

Cash withdrawals from ATMs inside the UK/European Economic Area (EEA) are free with Monzo Plus or Monzo Premium (although keep in mind that some ATMs may levy a fee). With Monzo’s free plan, they’ll charge you 3% every 30 days for withdrawals that are more than $250.

In some other nations, the maximum withdrawal you may make in a 30-day period is £200 before you have to pay a 3% withdrawal fee App-based banks. For Monzo Plus (up to £400) and Monzo Premium (up to £600), this cap is greater.

Overdraft fees

Monzo provides overdrafts up to $2,000 in size. Depending on your credit score, an overdraft will result in fees of 19%, 29%, or 39% EAR (varying).

To put this into perspective, you would pay £27.45 if you used an arranged overdraft of £1,000 for 30 days with a 39% EAR (variable).

Monzo will simply refuse any payments that might push you over your limit if you don’t have an overdraft, although this won’t apply to “offline” payments like those made through TfL or on aeroplanes. In this situation, you’ll start to incur the % fee and go into the red.

Get Paid Early

Want to be paid sooner? You can using Monzo.

Monzo can advance you your earnings at 4 p.m. the day before the money is scheduled to leave your employer’s account if you have a job and set up for your income to be paid into your Monzo account App-based banks.

Monese

Current account features

Similar to Revolut, Monese is an Electronic Money Institution registered with the FCA rather than a bank with a full banking licence. Your money is stored apart from the business’s finances and will be safe in the event that the App-based banks fails.

They provide all the standard benefits and are particularly practical for overseas students. However, there are quite a few costs to be aware of with Monese, unlike some of the other App-based banks.

Here’s a rundown of the main features of Monese accounts:

• No proof of address, credit history or regular income needed to open an account
• Real-time notifications to keep track of spending
• Lock and unlock your card instantly in the App-based banks
• Deposit cash into your account at the Post Office or PayPoint shop
• Transfer money abroad in different currencies using real wholesale exchange rates
• Transfer money to your account from outside the UK using their European IBAN
• Open both a UK and Eurozone current account at no extra cost, allowing you to spend in GBP and Euros
• You can earn money by referring friends.

Things to watch out for with Monese:

• There is a £4.95 card delivery fee
• The Starter account has a 2.5% exchange fee (plus an additional 1% on weekends) for international bank transfers to non-Monese accounts, as well as a 2% fee for foreign currency card spending.
• ATM withdrawals cost £1.50 on the free Starter account.
• There’s no overdraft facility. If you do end up with a negative balance, you won’t be charged but your account will be locked until you top up.

Anyone can open a Monese account

The fact that almost anybody may create an account with Monese, regardless of how long they have lived in the UK, is one of their main selling points.

You don’t need to submit evidence of address to open an account, unlike pretty much all other banks. You may still open a current account right immediately if you’ve recently arrived in the UK from overseas.

All you need to do is take a selfie and a picture of your ID, preferably a passport or ID card. It won’t take long for you to receive an account number and sort code. You don’t have to deposit money right immediately because there is no minimum balance requirement.

Once your account is open, you may conduct transactions, set up direct debits, and receive and send payments just like you would with any other current account.

Deposit cash

It’s typically impossible to make a cash deposit into your account with an App-based banks because they don’t have any physical locations.

However, you can deposit cash through Monese’s partnership with PayPoint and the Post Office. Simply take your Monese card to any Post Office location or store with a PayPoint sign, provide the cash you wish to deposit, and the funds will be available in your account the next business day.

However, there will be a fee for this service. The fee for a Starter account is 3.5% (minimum £3). You will be charged 3.5% for cash top-ups that are more than £400 per month with the Classic account. Any cash top-ups that go beyond your monthly allocation of £1,000 on a Premium account will incur a 3.5% fee.

There are limits on how much you may deposit as well. At the Post Office, these limits range from £5 to £250 per transaction, £500 per day, and £1,300 per week App-based banks. The PayPoint cap is £249 per transaction, £500 daily, and £1,300 weekly.

Although having access to it is a beneficial feature, the high costs may render it essentially useless.  It would be better for you to deposit money at a conventional bank and transfer it to your Monese account.

Other ways to deposit money

You can top off your App-based banks account in addition to cash deposits by making regular bank transfers, IBAN transfers, or fast debit card top-ups.

Money may be deposited into your account from overseas using the Monese European IBAN (International Bank Account Number). Use the following IBAN information, and be sure to reference your Monese ID. Once translated into GBP, the euros will be credited to your account or, if you have a Eurozone account, they will be sent there directly.

A debit card that is likewise in your name and can be used to rapidly fill up your account is free.

Despite having a complete banking licence, Atom Bank does not provide current accounts as Starling and Monzo do. Instead, it focuses on offering mortgages and savings accounts through internet banking.

Atom cannot yet be used for daily purchases, however current accounts and debit cards may be added in the future.

Biometric security

The adoption of biometric security by Atom Bank is one of its distinctive features. This indicates that, in contrast to the majority of other applications that utilise touch ID, the Atom App-based banks makes use of face and voice recognition in addition to a passcode.

It may be necessary to take a photo or read a sentence out in order to use the app; this is undoubtedly lot simpler than having to memorise difficult passcodes or security questions.

Fixed Savers

Fixed savings accounts are the main offering from Atom. You may start saving with anything between £50 and $100,000 by opening an account in a matter of minutes.

You may select either monthly or annual interest for each savings account; monthly interest will probably provide you a little better value.

At the time of writing, the Fixed Saver accounts’ interest rates ranged from 1.98% to 2.70% AER.

However, keep in mind that you cannot withdraw your funds until they have reached maturity, just like with the majority of fixed-rate savings accounts. Before you stash the money away in a fixed rate account, make sure you won’t need it at all.

Instant Savers

Atom now offers immediate savings accounts in addition to fixed savings accounts, allowing you to deposit any amount up to £100,000 and access your funds anytime you choose.

You must link your Atom Instant Saver account with your current account in order to send and receive money.

Atom is now paying 1.35% AER interest on their instant-access savings account.

Mortgages

Although it would be premature to consider purchasing a home while still a student, mortgages are another one of Atom’s key offerings. It features a network of brokers that may offer you advice on your circumstances and the best course of action.

Once you’ve submitted your application, you can monitor it in-App-based banks and continue managing it from there until it’s approved — it’s that simple.

FAQs

Also Read: Will The Neobank Bubble Eventually Pop?