Smart bank accounts have been a massive help to me in becoming debt free. One of the biggest game changers for me in terms of managing my money better was using the piggybanking or virtual cash envelope system, which is basically to have several different pots for monthly expenses. You can read more about how I use the system here.
My main account is with Nationwide, and through their online banking app I opened several online saver accounts for piggybanking, as well as a separate current account for my spending money. This was all working really well, except I felt I could do with even more savings pots, but transferring between all these different accounts, even in one app, was a bit of a faff.
That’s when I discovered opening a smart bank account was the answer!
What is a smart bank account?
Smart banks are app based with no branches, and are banks in their own right rather than being underwritten by any of the traditional banks. Spending is in real time; as soon as you use your card for purchasing or withdrawing, you get an instant notification. You can also speak to a customer service assistant over the phone 24 hours a day.
I opened my Starling smart bank account online in just a few minutes; my card was sent out via post and arrived within a couple of days.
The coolest thing was opening a joint account with my husband. As we were both already Starling smart bank account holders, we selected to apply for a joint account in the app, held our phones together and followed a few instructions, and the account was created! It was so easy. I can access both of these accounts within the same app.
It is important to note that not all smart banks may have the same protection as traditional banks. However, along with Monzo, Starling have £85,000 Financial Services Compensation Scheme (FSCS) protection which is in line with other traditional banks such as Nat West. I am basing this post on my experience with Starling.
How do you use the Starling banking app?
The app is my favourite thing about Starling. I decided I would use it as my spending account, so I continue to have my salary and bills coming out of Nationwide, and I pay myself an amount to my Starling smart bank account in the same way you would with any other payment. The money instantly transfers and I get an immediate notification.
Within the account, it is very easy to set up my virtual cash envelopes without having to faff around with different actual accounts. In reality, my money is still all in one account but I see it divided up into as many different sections as I wish. Of course, transferring the money back out of the “pot” so I can either withdraw it or pay via my Starling bank card is instant too. As you can see from the screenshot, I have several pots set up, in addition to the main area of the account which I use for everyday spending. I still use my nationwide online savers for things like groceries as it seemed silly to stop using them. I just like the fact that with Starling you can set up as many as you like within one account without any application or waiting.
What are my favourite features of Starling?
Instant payment transfer – The real-time spending of Starling and other smart accounts is a game changer – no more waiting for pending payments and not knowing if your balance is accurate.
Paying a friend – In my traditional bank account if I was paying someone new, I couldn’t add them as a payee via the app, I had to log in with a customer number on the main website and have my card reader handy. I understand this is all for security purposes but in comparison it was so easy to pay a friend using my Starling account, all I needed was their bank details and then the payment came out instantly. Even better, if your friend has a Starling account and is nearby, you can pay them without bank details using the Nearby Payments feature in the app.
Rounding up pot – I really like this feature, similar to the service provided by Moneybox. Every time I use my Starling card, it will round the total to the nearest pound and put the excess into a separate space. I have saved £25 without even noticing.
Tracking your spending – like many modern banking apps, Starling tracks your spending dividing it into categories so you can see where your money is going. Because I use this account solely for spending this is a useful feature.
Lock and unlock your card easily in app – This feature has started to become available in a lot of banking apps, (We’ve all seen the Barclays advert with the girl on the bus I’m sure!) and it’s so handy if you misplace your card to give you peace of mind.
No overseas charges – I haven’t been abroad since I’ve had my card but this will be a great feature on holiday.
Things to be aware of
Of course, I am not a financial adviser, so I would recommend doing your research if you have any doubts about opening a new account. The moneysaving expert website has information about Starling and other smart banks. It points out that to pay money into Starling you can do so via branches of NatWest, and cheques need to be posted, which may not be ideal. However I avoid any issues by keeping my existing current account for paying in. I can’t remember the last time I used a cheque, but it is still worth pointing out!
Do you have a smart bank account, or are you thinking of opening one soon? Let me know in the comments.