Monzo launches new credit card that auto-invests cashback – is it any good?

Challenger bank Monzo has launched a new credit card offering customers the chance to earn cashback and automatically invest it.

There are many cashback credit cards on the market, letting you earn rewards on your everyday spending, but Monzo’s new Aura card is the first in the UK to allow you to auto-invest any cashback you earn.

The card has a monthly £15 fee (£180 a year) and can be opened by existing Monzo customers aged 18 or over who have a Monzo current account.

The account is being gradually rolled out so might not be available to open yet. Monzo said it will contact customers to let them know when they can apply.

Luke Enock, general manager of borrowing at the bank, said: “We know our customers really value products that deliver both immediate benefits and longer-term financial progress in one.

“For the first time, Aura combines fee-free auto-investing and cashback as you spend, so every purchase has the potential to do more.”

What’s on offer from Monzo’s Aura credit card?

The Monzo Aura card offers 1% cashback on food shopping and 0.5% on everything else. Cashback is uncapped so there’s no limit on how much you can earn.

The average person spends £33 on food and non-alcoholic drinks each week, according to the government, or £1,716 a year. Someone spending this amount would get £17.16 in cashback a year from the Monzo Aura card.

If that person spent £10,000 a year on everything else, they would receive £50 in cashback.

The Aura card also comes with a range of perks which Monzo says are worth £360 a year, including an Apple TV subscription which is typically £9.99 a month and Google AI Plus which costs £4.49 a month.

You also get two airport lounge passes and two airport fast-track passes per year.

The card has a representative APR of 64.2% (variable) because of the high £15 monthly fee, but the purchase rate, which is applied if you don’t pay off your balance in full each month, is 29% per year (variable).

Credit cards in the UK come with Section 75 protection. This means the credit lender is jointly liable with the retailer if anything goes wrong with a purchase, if it is more than £100 and up to £30,000.

How does Monzo Aura’s auto-invest feature work?

The main unique selling point of the Aura card is the auto-invest feature on cashback earned. The feature can be turned on and off when you want.

You can invest in a range of exchange-traded funds (ETFs) including the FTSE 100, S&P 500 and Nasdaq, as well as exchange-traded commodities (ETCs) in gold and silver.

You will pay a fund management fee to asset management firm BlackRock, but it comes out of the value of your investments rather than as a separate charge.

The value of your investments could go up or down and you may get back less than what you put in.

How does Monzo’s Aura credit card compare?

The American Express cashback credit card is more competitive – you can get 5% cashback (up to £125) on purchases for the first three months, dropping to 0.75% on spending up to £10,000 per year afterwards.

It also has a lower £25 annual fee versus Monzo’s £180 per year fee. Its purchase rate is a similar 29.1% per year (variable).

Santander’s Rewards Credit Card comes with no monthly fee and offers 3% cashback on travel, eating out and takeaways and 0.25% on food shopping in your first year. After the first year, you earn 0.25% on everything.

You can also get 35% off Santander Travel Insurance.

Rachel Springall, finance expert at data firm Moneyfactscompare, said: “The Aura card will be of most benefit to consumers who use a credit card as their preferred choice when covering everyday expensive and frequent grocery bills, but also those who might want to automate small investments through the cashback they earn.

“As with every credit card, it’s important to pay off debts before interest applies, because interest charges could wipe out the benefits of the cashback offer. Clearing the balance every single month will be essential.”