The digital bank has partnered with a third-party bank of 1 per cent a year to savers.
The digital bank allows customers to squirrel away money into one of up to ten ‘Pots’, which are segregated areas within the app that tend to have a specific savings goal assigned to them, such as a holiday or Christmas.
The bank app will now pay 1 per cent interest per annum on savings in these pots, with interest paid monthly. To deliver this, it has partnered with Investec Corporate & Investment Banking.
The pots will be covered by the Financial Services Compensation Scheme (FSCS) and are described as ‘flexible’, meaning customers can withdraw money at any time and will receive the funds the next working day.
The FSCS will guard up to £85,000 of users' money across all Monzo’s saving pots, as well as any money they might have deposited separately with Investec. However, that £85,000 allowance does not affect the protection offered to those with money stored separately in Monzo accounts, which will also be covered up to £85,000.
Monzo describes its new savings pots as its ‘most significant move towards marketplace banking so far’. The feature will be gradually rolled out to customers, who’ll be notified by email when they’re eligible to start earning interest.
Tom Blomfield (pictured), Monzo’s CEO, said in a statement: “At Monzo, our goal is to build a marketplace bank, that lets people access a choice of products and services from across the market, all from within one app. By working with firms like Investec, we’re giving our customers the convenience and control they need to make money work for them.”
Monzo has also flagged that it plans to partner with other companies to expand the range of options available savers, with fixed-term savings mentioned as one option.