Monzo's current account does not pay interest on your main balance — making it more permissible for everyday use than most high street banks. However, Monzo is not halal-certified and offers interest-bearing savings pots which must be avoided. For a fully Shariah-compliant bank, Al Rayan Bank is the better choice.
Avoid: savings pots, Monzo Flex (BNPL), overdraft facility. Safe to use: current account for salary, payments, and spending.
Breaking Down Monzo's Features
| Monzo Feature | Halal Status | Why |
|---|---|---|
| Current account (main balance) | ✓ Permissible | No interest paid on balance |
| Savings Pots (interest-bearing) | ❌ Avoid | Partner banks pay interest — riba |
| Overdraft facility | ❌ Avoid | Interest charged on overdraft — riba |
| Monzo Flex (BNPL) | ❌ Avoid | Interest charged if not repaid — riba |
| Instant transfers & payments | ✓ Permissible | Standard payment service, no interest |
| Salary & direct debits | ✓ Permissible | Standard banking operations |
| Monzo Premium (paid tier) | ⚠ Check features | Includes interest on balance — avoid this tier |
The Key Issue: Monzo's Savings Pots
Monzo's "savings pots" are provided in partnership with third-party banks (such as Investec and others). These pots pay Annual Equivalent Rate (AER) interest — typically 4–5% in 2026. This is riba and must be avoided.
To keep your Monzo use halal: simply do not activate any savings pot. Your main Monzo current account balance does not earn interest, so keeping all your money in the main account avoids the issue entirely.
The savings pots pay AER interest — this is riba. Keeping your balance in the main account avoids this. If you've already earned interest, consider donating the interest amount to charity.
Is Monzo's Underlying Banking Halal?
This is the deeper question. Monzo, as a licensed bank, uses fractional reserve banking — it lends out deposits at interest to generate revenue. From a strict Islamic finance perspective, this means Monzo's underlying operations are interest-based, even if your personal account doesn't charge you interest directly.
Many UK Muslims accept mainstream banks like Monzo for practical purposes while banking with Al Rayan for savings. This is a personal religious decision.
The Fully Halal Alternative
Al Rayan Bank — The Fully Shariah-Compliant Option
If you want a bank that operates entirely on Islamic finance principles — not just a conventional bank with interest-free features — Al Rayan Bank is the answer. FCA-regulated. FSCS-protected. Zero riba.
Open Al Rayan Account →We may earn a commission if you open an account. This does not affect our review.
Similar Guides: Are Other Digital Banks Halal?
| Bank | Interest on Balance? | Halal-Friendly? |
|---|---|---|
| Monzo (standard) | No (main account) | ✓ Permissible (avoid savings pots) |
| Starling Bank | No (current account) | ✓ Permissible (avoid savings spaces) |
| Revolut | Yes (some plans) | ⚠ Disable interest features |
| Chase UK | No (current account) | ✓ Permissible (everyday use) |
| Al Rayan Bank | Profit-sharing (halal) | ✓✓ Fully Shariah-compliant |