Monzo offers users a simple access account with 1% access

Monzo offers users a simple access account with 1% access

Monzo users have been able to open savings accounts for some time without interest – but now they can earn one percent of their cash.

Challenger Bank's long-awaited savings offer is the result of a partnership with South African bank Investec, which provides its easy-access savings account to users via the Monzo app.

It is part of Monzo's new approach to being a bank: instead of developing and offering its own savings accounts, credit cards, insurance, mortgages or loans, as banks usually do, it intends to offer these services to their users through their app from a whole range of third-party providers.

Tom Blomfield, Monzo's Chief Executive, said, "Monzo is not a traditional bank, we are designed as a control face so people can manage their money in one place."

Monzo has traditionally focused its offer on millennials and originally introduced a prepaid card

Monzo has traditionally focused its offer on millennials and originally introduced a prepaid card

Monzo has traditionally focused its offer on millennials and originally introduced a prepaid card

He added, "This partnership with Investec is just one of many we want to build in the coming months.

"It's an Investec savings account, but you can open it in about three easy steps in your Monzo app, instead of bothering to go straight to Investec and reenter all your data.

"We have already completed a similar transaction with TransferWise, for example Expect others to follow pretty quickly."

To open the Investec Easy Access account through Monzo, you need a minimum deposit of £ 1,000.

There is no limit to the amount you can save on the account. It is possible to open a maximum of 10 accounts or "pots" as Monzo likes to call you.

There is a small catch – you can get your money back at any time without penalty, but it takes a whole working day for the money to return to your Monzo checking account.

Any money you put in a savings cup is covered by the Financial Services Compensation Scheme, which means you can fully protect up to £ 85,000 of your savings.

However, this limit applies to all money you hold directly with Investec and Monzo. So be careful if you have more than one account.

The remainder of the money is not included in your Monzo account, which is separately protected by the FSCS for up to £ 85,000.

Monzo users can use the Monzo app to open an Investec savings account

Monzo users can use the Monzo app to open an Investec savings account

Monzo users can use the Monzo app to open an Investec savings account

The accounts are not yet available to all users, but are being phased in.

If you are looking for a simple account, you already have a Monzo account, then it does not look like a bad option.

However, the one percent rate is far from the best option for savers looking for an easy-access account.

Marcus of Goldman Sachs was launched last month, offering a 1.5 percent best-buy rate for his easy-access account. Note, however, that 0.15 percent of it is included as a 12-month bonus that expires after the first year.

It is also quick to set up, can be managed online and has no minimum balance.

>> Compare here the best savings offers for easy access

Monzo CEO Tom Blomfield

Monzo CEO Tom Blomfield

Monzo CEO Tom Blomfield

Monzo: the 1 billion bank

The merger of Monzo-Investec will take place 24 hours after the bank finishes its last round of financing. It is raising £ 85m from the venture capital firms General Catalyst and Accel.

This means that the app-only challenger bank is now valued at a massive £ 1 billion.

This is despite a £ 33.1m loss for this year earlier this year and the realization that 80% of users are not paying their salaries.

Monzo has traditionally geared its offerings to millennials and in 2015 launched a pre-paid card with the signature "Hot Coral".

She received her full banking license in April 2017 and began moving clients to current accounts in September.

One of the biggest raffles of the account was that ATM money could be withdrawn without money from abroad, a reason why many have signed up for it.

However, as of October, one change meant that customers could only withdraw £ 200 per month for free, with a 3% fee for additional withdrawals.

Blomfield said today he expects the company to reach break even in the next few years.

"We have already achieved the cost-effectiveness of a current account at only £ 15 a year – a cost reduction of 90 percent compared to most traditional bank accounts," he added.

Monzo is one of several new challenger banks that want to disrupt the banks of the high street.

Marcus, Tandem, Starling and Atom offer different approaches and offer a selection of credit cards, savings accounts, checking accounts or mortgages.

>> Compare here the challenger accounts

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