TL;DR
Monzo has launched a phone plan that reduces monthly cost each year of ownership and includes a SIM. The plan suits Monzo current account holders. Comparison with traditional contracts and SIM-free buying still applies on total cost over the term.
Monzo has launched a phone plan that reduces in monthly cost each year of ownership, marketed as a way for customers to pay less the longer they keep the device. The plan is open to Monzo current account holders and competes with traditional mobile contracts from O2, EE, Vodafone and Three on total cost over the term.
How the Monzo phone plan works
Monzo's phone plan packages the handset and a SIM into a monthly payment that reduces over time. The structure rewards customers who keep the same handset rather than upgrading each year, with the monthly payment stepping down at fixed intervals.
The plan is opened through the Monzo app and links to the customer's Monzo current account. Direct Debits cover the monthly payment, with the SIM provided through Monzo's mobile partner network.
Who can sign up
Existing Monzo current account holders can apply through the Monzo app. Customers without a Monzo account need to open one first, with the standard ID checks and the Current Account Switch Service available for those moving from another bank.
Credit checks apply because the phone plan includes a hire-purchase element. Monzo carries out the check through a credit reference agency and may decline customers whose record falls outside the agreed criteria.
How it compares with traditional contracts
Traditional mobile contracts from O2, EE, Vodafone and Three typically run 24 months at a flat monthly cost. SIM-free buying separates the handset purchase from the network plan, often delivering a lower total cost over the term but requiring an upfront cash payment.
Monzo's plan sits between the two. Customers pay the handset off monthly without the upfront cash hit, but with the monthly cost dropping each year the total cost can be lower than a traditional flat-rate contract.
Consumer protections and switching
Phone plans that include credit are regulated by the Financial Conduct Authority. Customers have a 14-day cooling-off period under the Consumer Credit Act 1974 and can complain to the Financial Ombudsman Service if a dispute cannot be resolved with Monzo directly.
The SIM portion is regulated by Ofcom. Customers can port their existing mobile number through the standard porting process, with their old provider releasing the number within one working day after a switch request.
Where Monzo sits in the wider banking market
Monzo is a UK app-based bank authorised by the Prudential Regulation Authority and regulated by the FCA and PRA. Customer deposits are protected by the Financial Services Compensation Scheme up to £85,000 per depositor.
Monzo competes with Starling, Chase UK and Revolut on app-based current accounts, and with the major UK banks on mortgages, savings and overdrafts. The MoneyHelper website provides free comparison guidance.
Key facts
- Monthly cost reduces each year of ownership.
- Open to Monzo current account holders.
- Includes handset and SIM through Monzo's mobile partner.
- 14-day cooling-off period under Consumer Credit Act 1974.
- FSCS protection covers up to £85,000.
FAQ
How does the Monzo phone plan get cheaper each year?
The monthly payment steps down at fixed intervals after the first year of ownership. The structure rewards customers who keep the same handset rather than upgrading each year.
Who is eligible?
Existing Monzo current account holders can apply through the Monzo app. New customers need to open a Monzo account first. Credit checks apply because the plan includes a hire-purchase element.
How does it compare with O2 or EE contracts?
Traditional contracts run 24 months at a flat monthly cost. Monzo's plan reduces monthly cost as the handset is paid off, which can deliver a lower total cost over the term for customers who keep the same handset.
What protections apply?
The credit element is regulated by the FCA with a 14-day cooling-off period under the Consumer Credit Act 1974. The SIM is regulated by Ofcom. Disputes can go to the Financial Ombudsman Service.
