There's now a wave of banking and savings apps which give you a helping hand with budgeting, saving and generally managing your cash in a way traditional banks don't.
Most of these are app-based, so if you're not smartphone-savvy (or indeed don't have a smartphone) or you prefer to manage your money by phone or in branch, they won't be for you. Or if you're just after the best customer service, overdraft or switching freebie, go to our Best Bank Accounts guide instead.
Best banking apps
App-based banking need-to-knows
Digital banking's on the up – almost 22 million people regularly used a banking app in 2017, according to trade body UK Finance, with 174 app logins every second. Here's what you need to know...
What is app-based banking?
App-based banking is basically what it says on the tin: a way to bank using an app. Unsurprisingly, most (if not all) of these companies are purely online or app-based.
That said, most have in-app customer support, with dedicated teams on hand to offer assistance if you've any questions or issues. Some even work in Facebook Messenger, so you can talk to someone about your banking in between chatting to friends.
All apps featured in this guide are free to download – though some have costs associated with running them, which we clearly explain in our best buys below.
If you're after the top bank accounts in terms of service, overdraft facilities, linked savings accounts or switching bonuses, see Best Bank Accounts.
Does it matter what kind of smartphone I have?
The apps in this guide all work with Android and iOS phones, so you should be able to download them if you've one of those. Alternatively, several of the apps let you download them to an iPad or other tablet if it runs on Android or iOS.
Unfortunately, if you have a Windows Phone or other smartphone/tablet, you WON'T be able to get any of the new apps in this guide – though you can get traditional banks' apps (see Cheap Mobile Tips if you want a new phone).
The apps can help with budgeting and tracking spending
Although these apps aren't solely meant for budgeting, a lot of the ones we feature in this guide can also help with keeping your finances in check.
Many give real-time notifications when you spend or save, something traditional banks don't do – so for example, if you bought something for £5 in Boots, you'd get an instant pop-up on your phone telling you what you've spent.
Another feature they have is to give you insights into your spending habits. This means you'll easily be able to see how much you spend in one particular shop each month (coffee addicts beware!), or more generally how much you spend on entertainment or travel.
This should make it easier to budget and keep track of your money, allowing you to cut the cloth where needed.
Your money's not always protected in the same way as a traditional bank
Before we get into what these apps do, let's talk safety. When it comes to your finances, you want to be sure your money's safe – so it's important to understand how your money's protected. UK-regulated banks such as Barclays and Santander have the full £85,000 Financial Services Compensation Scheme (FSCS) protection (see more on this in our Savings Safety guide).
Some of the apps below also have FSCS coverage, but a few don't. Instead, many digital banking apps have an 'electronic money' licence. This means they have to hold your cash in a bank account ring-fenced from their operating cash – this is normally with a big bank such as Barclays or NatWest.
Should the digital bank go bust, assuming it's done things by the book, your money would be protected as it'd be in a separate account.
But there's an important caveat. If the bank or building society in which your money was ring-fenced went bust, your money may NOT be protected. This is because it's not counted as a deposit, in the way that cash in a savings account would be, and so it's not as clear-cut.
For providers in this guide, we tell you how your money's protected – it's up to you whether you want to take the risk of a big bank that's holding your money going under.
The bank accounts are cool and high-tech BUT you can often get better rewards elsewhere
One thing that many financial technology firms – or fintechs – are trying to do is become fully fledged banks, offering an alternative to the main high-street players. Like their high-street counterparts, they offer debit cards, overdrafts, direct debits, standing orders and more. These challenger banks sell themselves on their high-tech, easy-to-use features, but it's still worth being aware of the old-school brands.
Many offer incentives of £100+ if you switch to them, or ongoing rewards such as in-credit interest or cashback on bills, something the challenger banks don't tend to do. For full options of these, see Best Bank Accounts.
Can I switch to one of these banks?
Yes indeed. If the provider's signed up to the Current Account Switch Service (CASS), this process is quick and seamless and works the same way as switching to a traditional bank. It takes seven working days, all payments going in, eg, salary, and out, eg, utility bill direct debits, are moved to your new account, and any wrongly applied charges will be refunded. For more on this, see Best Bank Accounts.
However, if a bank isn't signed up to CASS, you'd have to switch using the older, manual process, which takes longer and doesn't offer the same guarantees. We note in our top digital bank accounts section whether or not each bank is signed up to CASS.
They can make saving automatic
Most of the apps are designed with you, the customer, in mind. Oodles of clever tech make managing your money as easy as pie.
In this guide we feature apps for saving, which have functions such as calculating how much you can afford to save each week and automatically sweeping money into a separate savings account – though you can always tell the app to save less if you're feeling the pinch, or move the money back into your current account if you need it.
This is intended to help you save without having to think about it, which should lead to higher savings building up.
See our Top Savings Accounts guide for the best on the market.
It's easy if you lose your card or forget your PIN
If you bank with a traditional provider and misplace your debit card or can't remember your PIN, it usually involves calling to cancel the card or waiting for a new PIN to be posted.
But new banks are making it easier to manage if you lose your card or have a lapse of memory – they tend to let you freeze or unfreeze your debit card with the touch of a button, and can give you PIN reminders in-app. You'll still need to enter a passcode or use 'touch ID' fingerprint recognition to get into the app, though; anyone can't just use your phone and steal your PIN.
So no more cancelling your card and then finding it seconds later at the bottom of your bag...
Want an overdraft? You'll need to pass a credit check
All providers featured in this guide perform what's called 'know your customer' (KYC) checks – this means they need to prove you are who you say you are when you apply, and will often ask for proof of identity and address. These ID checks appear on your credit file as a 'soft search', which other lenders can't see, unlike a 'hard search' (see Credit Scores for more).
If you're applying for an overdraft, which several new players offer, you'll be subject to a full credit check when you apply for it, to see if you're someone the provider would lend to, and if you did go into your overdraft, that you've a track record of repaying what you owe. This appears to lenders on your credit file, and many banks automatically do a full credit check when you apply for an account, whether you want an overdraft or not (exceptions are Starling Bank and Monzo below).
Banks will use this credit check, plus data on your application form, to decide whether to accept or reject you. Sign up to our Credit Club to see your free credit report and find out who's checked you, and what sort of search they've done.
Banks now have to let you give authorised apps access to your current account
Many apps, including the automatic savings apps below, require you to give them access to your existing online banking, so they can see your current account and credit card info. This is to give you insights into your spending habits, calculate how much you can afford to save, or combine multiple accounts in one place.
This sometimes means giving the app your login details so it can access your data. And because of a new regulation, snappily called 'the second Payment Services Directive' (PSD2), and reforms to the banking industry called Open Banking…
Banks now must share your banking data with authorised third parties if you've given permission.
By 'authorised' we mean those third parties, such as apps, which have special licences from the Financial Conduct Authority (FCA) or other European regulators – see our Open Banking explained guide for more. Banks may still share your info with unauthorised firms if they choose to. However, if you choose to do this with an unauthorised firm or app, you may be liable for any fraud affecting your bank account.
We note below if an app which connects to your bank account is authorised to provide these 'account information services' – if it's not yet, you need to decide whether or not you're happy to take on the extra risk before you apply.
What if I use an unauthorised app?
If you use a third-party provider that's not authorised, you won't get the same levels of protection against fraud. So if you lose money through it, your bank may not pay out.
You should always check a provider before you give it access to your accounts – you can do so on the FCA Register. If it's not authorised, ask what security measures it has in place.
However, if you're happy with a provider, you can choose to give it access even if it's not authorised, but you need to be aware of extra risks.
That said, it'll take time for all new providers to gain authorisation, and there's also a transition period which means some don't have to be authorised until the end of 2019.
We asked the FCA what you should do if you have doubts about a provider. It said: "If you're unsure about whether a company is legitimate, you should ask them for more information, for example, who they are regulated by.
"If you don't know who you are talking to, or there is reason to suspect that the provider is not who they claim to be, don't disclose your banking security credentials or other personal or financial information."
Bear in mind too that using a firm that's yet to be authorised doesn't automatically mean you're not protected – some apps already adhere to other regulations, such as the e-money regulations, which means your money is safeguarded.
Top new current account apps
For the challenger banks below offering current accounts, you apply through their apps, and the process is quick and easy, typically taking a couple of minutes. We've listed our top picks below.
These accounts can be beaten if you're looking for free cash to switch or high interest, but if you're after snazzy features such as budgeting help and instant notifications, read on.
Don't want a full current account? There are also several providers offering prepaid cards, which you load with cash and then use like a debit card. For more on these, check out our guides on Prepaid Cards, Prepaid Travel Cards and Cards for Under-18s.
Useful spending notifications, great for budgeting + top for overseas use
App-based Starling Bank* offers a full current account that you can open in a couple of minutes. It gives you real-time notifications when you use your debit card, insights into your spending, and lets you set up savings goals. You also earn a small amount of in-credit interest.
As an added boon, there are no fees for spending or cash withdrawals abroad, making it a top-pick debit card overseas, though it's possible this'll change in future. Starling is regulated by the FCA and has the full £85,000 UK savings safety guarantee.
What else can the app do? As well as providing spending notifications and insights, the app lets you freeze and unfreeze your debit card at the touch of a button, report it lost or stolen or get a PIN reminder in-app. You can also turn off certain functions of your card such as online spending, contactless payments or ATM withdrawals if you want to control a specific type of spending.
Starling also has a 'marketplace', which lets you use other companies' services through its app. There are only a couple of companies featured at the moment, but in future it'll offer ISAs, savings accounts, insurance and mortgages, among other products.
Are there limits on using the card? You can make up to three cash withdrawals a day, totalling a maximum of £300.
What exchange rate will I get overseas? The debit card is a Mastercard, so you'll get the Mastercard rate, which you can check here. There are no fees to use your card abroad, making it a top pick for overseas use.
Will Starling credit-check me? If you apply for an overdraft, Starling will run a full credit check on you. If you apply for the account without an overdraft, it'll just run an ID check on you, which won't appear to lenders on your credit report (though you'll be able to see it).
Is my money protected? Yes, Starling has full FSCS protection, so your money saved with it is safe up to £85,000.
- Arranged overdraft cost: 15% EAR variable (waived if less than 10p in any month)
- Unarranged overdraft cost: 15% EAR variable (waived if less than 10p in any month). Max £2/mth.
Budgeting help & decent for overseas
Monzo Bank has offered one of our top-pick prepaid cards since it launched in 2016, and now it's rolled out a current account.
Like Starling above, it gives real-time notifications when you use your debit card, and insights into your spending. You can also set money aside in 'pots', and choose to round up every purchase you make to the nearest pound, with the difference going into a savings pot.
It has no fees for spending abroad, though overseas ATM withdrawals over a total of £200 in any 30-day period will incur a 3% charge. After the 30 days are up your allowance resets and you can withdraw up to £200 again fee-free.
It's FCA-regulated, and the current account has the full £85,000 UK savings safety guarantee.
What else can the app do? As well as providing spending notifications and insights, the app lets you freeze and unfreeze your debit card at the touch of a button, report it lost or stolen or get a PIN reminder in-app.
You can also set up 'pots', which let you assign money in your account to goals such as saving for a rainy day, or a specific purchase – you can move money back into your current account whenever you want, but be aware that any money you have in a pot won't be included in your main account balance.
Monzo also has a feature called 'Bill Tracker' which alerts you if a regular direct debit leaving your account is higher or lower than usual – helpful if, for example, you've been moved onto a higher energy tariff or racked up a big phone bill without realising.
Are there limits on using the card? You can withdraw up to £400/day from ATMs, up to a maximum of £5,500/mth.
What exchange rate will I get overseas? The debit card is a Mastercard, so you'll get the Mastercard rate, which you can check here.
Will Monzo credit-check me? Yes, if you apply for an overdraft. If you don't apply for an overdraft, it'll just run an ID check on you, which won't appear to lenders on your credit report (though you'll be able to see it).
Is my money protected? Yes, Monzo has full FSCS protection, so up to £85,000 is safe when saved with it.
- Arranged overdraft cost: £20 buffer then 50p/day
- Unarranged overdraft cost: £20 buffer then 50p/day (max £15.50/mth)
Top-rated traditional banks' apps
You may want a slick app but from a banking name you know. We recently ran a poll to ask which banking apps are best – and while Monzo and Starling (above) came out on top for features and ease of use, the two below were the best-rated big names.
For now, neither of these offers budgeting help or spending notifications (like the other apps in this guide), but they're decent options if you want to stick with a name you know.
- NatWest – 48% of people in our poll said the app's 'great to use and has lots of features'. NatWest provides several current accounts but its Reward Account is one of our top picks, as for a £2 monthly fee it pays 2% cashback on various bills paid by direct debit.
Barclays – 47% said the app's 'great to use and has lots of features'. As well as letting you check your balance, see transactions and manage payees and recurring payments, the Barclays app lets you pay cheques into your account through your phone, temporarily freeze your card and get PIN reminders. Download for iOS (rated 4.8/5), Android (rated 4.4/5) or Windows Phone (rated 4.5/5).If you've got the Barclays Bank Account (or Premier) you can also apply for the Barclays Blue Rewards scheme. It's an add-on to Barclays' current accounts which, for a £3 monthly fee, will pay you at least £7/month back.
Top savings apps
As well as current accounts, there are other apps that focus on offering savings products, whether it's top rates for locking your cash away, or using tech to automate your savings. It's important to note that some of them may NOT be FSCS-protected, but we'll let you know if that's the case. Here are our top picks...
Up to 5% interest if you refer friends, automatic saving but not FSCS-protected
Normally the Chip app's* savings interest starts at 0%, yet if you refer friends the interest is increased by one percentage point for a year for each person you recommend who starts saving through it, up to a max 5%.
It's a savings app that you connect to your current account. It uses an algorithm to work out how much you can afford to save, moving it automatically into a savings account. You can also choose to manually move money into it up to six times a month. Interest accrues weekly, is paid quarterly, and you can withdraw money whenever you want.
The app works with most of the big banks.
Bank of Scotland, Barclays, Co-op Bank, First Direct, Halifax, HSBC, Lloyds, Metro Bank, Nationwide, NatWest, RBS, Santander, Tesco Bank, TSB and Ulster Bank.
Important: It stores your money in an 'e-wallet' and DOESN'T have the usual £85,000 per person protection via the FSCS. However, the real risk is if Barclays went bust, which is where your money is held (see FAQs for more).
It's also worth noting that banks could say you're liable for fraud on your account if you've shared your details with apps such as Chip, though it's in the process of becoming FCA-authorised to stop you being liable – see our need-to-know above.
- Interest rate: One percentage point fixed for a year for each friend you refer (max 5%)
- Interest paid: Quarterly
- Max savings: £100/day (up to six manual saves a month). £10,000 total
- How to get the app: Download for iOS (rated 3.7/5) or Android (rated 3.7/5)
- Protection: Not FSCS-protected, money is ring-fenced (see FAQs)
How does it work? You give Chip 'read-only' access to your current account. It analyses your income and spending, then every four to seven days calculates what you can afford to save, and uses a direct debit to move that to a separate 'savings' account, without you noticing. The money normally amounts to about £10-£25 five times monthly; the max is £100 (so £500/mth).
You can also manually move a max £100/day up to six times a month, tell it to save more or less and pause automatic saving.
What if it makes me overdrawn? It'll cover your fees and pay £10 compensation – though you can choose to allow it to take you overdrawn (for example if you had a 0% overdraft).
Is my money safe in Chip savings? Chip isn't a bank. It stores your money in an 'e-wallet' provided by 'e-money provider' Prepaid Financial Services (PFS), which is FCA-regulated. Your money is held in a ring-fenced Barclays account. Under e-money regs, if Chip or PFS went bust your money remains in Barclays together with any interest already paid to you, though you may end up paying insolvency fees (likely small).
In the unlikely event Barclays went bust, your money ISN'T protected by the usual £85,000 FSCS savings safety guarantee, so you'd lose it.
This app currently has no way of making money – the interest comes from its marketing fund. Its aim is to build a customer base then offer users other services it profits from in future, such as overdrafts and credit cards. Of course it may change its savings offering in future too. We've done all the checks we can, but you need to accept there are always unknowns with a new concept such as this, so you might want to consider how much you keep in there.
Automatic saving and free £5 when you first save
Plum* works in a similar way to Chip (above), in that it automates your savings. It lives in Facebook Messenger, and uses a smart algorithm to work out how much you can afford to save, moving it automatically into a savings account. Apply via our link and keep your account active (don't pause savings) and you'll get a £5 bonus added to your account within 30 days of Plum making your first automatic save.
Plum doesn't pay interest on money saved, but you can choose to invest through it with peer-to-peer lender Ratesetter's Rolling Market account – though you need to be aware of the risks. See our Peer-to-Peer Lending guide for more information.
Important: It stores your money in an 'e-wallet' and DOESN'T have the usual £85,000 per person protection via the FSCS. But the real risk is if Barclays went bust, which is where your money is held (see FAQs for more).
It's also worth noting that banks could say you're liable for fraud on your account if you've shared your details with apps such as Plum, though it's in the process of becoming FCA-authorised to stop you being liable – see our need-to-know above.
How does it work? To sign up to Plum, you need to connect it to your Facebook Messenger. Then you link it to your current account, giving it read-only access so it can see your transactions.
It uses its algorithm to analyse your spending and build a 'unique saver profile' for you, and then – through a direct debit – siphons off a few pounds every three to four days into your Plum savings account. You can tell it to save more or less, or pause automatic saving, and you can also move money into your Plum account manually. You keep money saved in your Plum account or invest it with peer-to-peer lender Ratesetter.
Which providers does Plum work with? Plum currently works with NatWest, RBS, Santander, HSBC, Lloyds, Barclays, First Direct, Halifax, Citibank, Nationwide, TSB, Bank of Scotland, Co-op Bank, Metro Bank, Clydesdale Bank, Think Money, Yorkshire Bank, M&S Bank, Tesco Bank, Ulster Bank, Citibank, Smile Bank, Danske Bank, First Trust Bank, Bank of Ireland and Post Office Bank.
Is my money protected? Plum deposits your money into a 'wallet' operated by MangoPay, an EU-regulated financial institution. Any money saved with Plum is held in a Barclays instant-access savings account. This means that if Plum were to go bust, you'd be able to recover your money from Barclays.
However, if Barclays were to go under, your money may not be FSCS-protected, so you could lose your cash – you need to decide if you're happy to take the risk.
It's also important to note the risks involved if you decide to go down the Ratesetter route with Plum: returns aren't guaranteed, you could lose your cash, and your money's lent out to individuals and you're dependent on them paying it back, though there is a provision fund in place to minimise risks. Ratesetter says no one's ever lost out, but of course if the economy took a downturn, it could mean more people defaulting. For more on this, see our Peer-to-Peer Lending guide.
Top app to invest your spare change
If you're happy to up the risk, in theory it can be possible to earn bigger returns than those currently available from top cash savings or ISAs – and the player below is hoping to weave investing into your day-to-day life. Though always remember that with investing it's possible that you'll lose money, not make it.
Investing's not something you should dive into headfirst if you don't know at least the basics – so take a look at our top 10 investment tips for beginners if you're unsure where to start.
ALWAYS remember the five golden rules of investing:
The greater return you want, the more risk you'll usually have to accept.
Don't put all your eggs in one basket. Try to diversify as much as you can to lower your risk exposure, ie, invest in different companies, industries and regions.
If you're saving over the short term, it's wise not to take too much of a risk. It's recommended you invest for at least five years. If you can't, it's often best to steer clear of investing and leave your money in a savings account.
Review your portfolio. A share might be a dud or you might not be willing to take as many risks as you did before. If you don't review your portfolio regularly, you could end up with a share account which loses money.
Don't panic. Investments can go down as well as up. Don't be tempted to sell or buy shares just because everyone else is.
Save and invest your spare change
Moneybox launched in 2016 and is an app that lets you invest from as little as £1. You can make weekly or one-off deposits into one of three investment options – cautious, balanced or adventurous. There's also a feature called round-ups, where you connect your debit or credit card to it and it rounds up your purchases to the nearest pound, investing the difference (eg, buy a £2.20 coffee and it takes 80p to invest).
Any savings you make are taken once a week via direct debit and invested a few days later, and you can choose to hold a general account or a stocks & shares ISA. If you've children, there's a separate app if you want to open a junior ISA for them.
Here's what you're investing in:
At sign-up you choose one of three options – cautious, balanced or adventurous. The option determines how your savings are split between cash, global shares and property shares, and Moneybox invests through what are known as 'tracker' funds. The splits are as follows:
- Cautious – 85% cash fund, 10% global shares fund, 5% property shares fund
- Balanced – 30% cash fund, 45% global shares fund, 25% property shares fund
- Adventurous – 5% cash fund, 60% global shares fund, 35% property shares fund
The three funds that Moneybox invests in are with well-established names: the Henderson cash fund, the Vanguard global equities fund and the BlackRock global property securities fund.
It's a good option if you want to dip your toe into the world of investing but aren't sure where to start. However, be aware that the charges are relatively high – the app costs £1/mth after the first three months plus 0.45% a year of whatever you invest (and there are also associated fund charges of 0.22% to 0.24% a year, though you'd pay this anywhere) – it can be cheaper to use an investment platform if you're happy to pick your own funds.
- Annual fees: £1/mth per product (free for the first 3mths) + 0.45% a year. Fund manager charges (estimated): 0.22%-0.24% a year.
- Min investment: £1 | Max investment: £20,000/wk (but £20,000/yr if in an ISA)
- Transfer-out fee: None, though charges £25 per fund for 'in specie' transfers (where you transfer a fund/holding directly to a new provider without cashing it in first – these are rare)
- How to get the app: Download for iOS (rated 3.8/5) or Android (rated 4/5)
Is my money protected? Moneybox has FSCS protection, so up to £50,000 is safe when saved with it. It's important to know that FSCS investment protection applies if you lose money due to Moneybox going bust, not if the underlying investment goes bust.
In other words, if the funds Moneybox invests in for you perform poorly, you've no protection as that's the nature of investing.
Q&A Digital banking
Is internet and mobile banking safe?
Yes. Banks have security systems in place that ensure fraudsters can't hack into your account whether you're logged in online or on your phone. But still be careful – never send your online/mobile banking information to anyone.
If using a mobile app, make sure you download the official version from your app store, and make sure you update the app regularly with any new security features.
It's also worth keeping your computer up to date with free antivirus software, so you're protected from viruses and spyware.
What about cryptocurrencies such as Bitcoin?
Unless you've been avoiding the internet lately, you've probably heard of 'digital currency' or 'cryptocurrency'. The most well known is Bitcoin, but there are others around such as Ethereum and Litecoin.
The apps we feature in this guide don't use this sort of currency, which can be EXTREMELY volatile, with prices fluctuating wildly. It's a risky investment, and not our speciality. You should only get into it if you're aware of the risks, and the fact you might lose all your money. You can read more about Bitcoin in Martin's blog.