Monzo's Aura Card: High Monthly Fee for Premium Perks and Automated Investing

Monzo has introduced Aura, a new metal credit card priced at £15 per month, designed to offer a suite of premium perks and a novel approach to managing cashback. The card includes subscriptions to Apple TV and Google AI Plus, along with uncapped cashback on purchases that can be automatically invested.

Aura provides 1% cashback on groceries and 0.5% on all other spending. This cashback can be directed into a selection of funds through Monzo Investments or paid out directly. The bank highlights that the card's benefits are valued at over £360 annually, aiming to justify the £180 yearly fee.

The subscription benefits alone are notable: Apple TV is valued at £9.99 per month and Google AI Plus at £4.49 per month. Cardholders also receive two airport lounge passes and two airport fast-track passes every 12 months.

Monzo claims Aura is the first UK credit card to automatically invest cashback. The bank suggests this feature caters to customers who seek both immediate financial advantages and long-term wealth building. However, the £15 monthly fee represents a significant cost, particularly for individuals who may not spend enough to recoup the fee through cashback or fully utilize the provided perks. To earn £15 in cashback alone, a customer would need to spend approximately £750 on groceries and £1,500 on other items monthly.

While Monzo waives its platform fee of up to 0.25% for Aura cardholders, the overall cost remains high. The card's representative APR is 64.2% variable, with a purchase interest rate of 29% variable. For those new to investing, alternative fee-free platforms such as Freetrade, InvestEngine, and Trading 212 might offer a more cost-effective way to start investing with small, regular contributions.

Monzo Aura offers a three-month interest-free period on purchases over £100, intended to assist with larger expenses. However, the bank emphasizes that credit cards are a form of borrowing and users should avoid spending more than necessary. The value of perks and rewards should be weighed against any associated fees or interest charges, especially if the balance is not paid off monthly.

Alternative credit card options include the Lloyds Ultra Credit Card, which offers 1% cashback on all purchases for the first 12 months and 0.25% thereafter, with no foreign transaction fees. American Express provides cashback on its Everyday card, with an introductory offer of 5% cashback for three months (up to £125) on spending up to £2,500. After this period, it offers 0.5% on spending up to £10,000 and 1% above that, with no annual fee.

The Amex Preferred Rewards Gold card has an annual fee of £195, which is waived for the first year. It offers a bonus of 30,000 points for spending £3,000 in the first three months, with points redeemable for various rewards or balance reductions. As with Aura, the value of these points should offset the annual fee for the card to be cost-effective.