Two or three years ago I switched my current account over to Starling Bank, and it has revolutionised the way I manage my money.
What initially drew me to Starling was the the ethical policies, 0% fees overseas usage (ATMs and paying by card), and – yes – because of the shiny fintech challenger bank thing, which I liked the look of. I was previously with Smile – which has a better ethical stance, but I didn’t like the fact it had to be bailed out by hedge funds. Of course, The co-op bank (and hence Smile) is now owned by the Coventry Building Society, which pushes it back up the ethical list. Triodos bank is also very near the top of my list (and I have savings accounts with them), but again their current account is just lacking features. I also liked the fact that Starling was founded by a woman.
What has kept me with Starling is that is it is absolutely fantastic product. The app is so easy to use, and the product has clearly been designed with a smartphone as the primary use case. This is in sharp contrast with the more traditional banks, who, it seems to me, have evolved online services as a way of providing the offline services online. It’s quite hard to put into words, but it’s the difference between starting from “we need to provide statements – ok, lets add that. We need to provide bank transfers, ok, lets add that” and “What would a bank account on a phone look like? What’s the landing page? what information needs to be in your face?”. Starling have clearly started with a clean slate and worked out what people want in a banking app – and have nailed it. I also really like the instant notifications – I don’t need to check my statements anymore each month, as I’ve reviewed each transaction along the way. Last “nice to have” is the spending breakdown; you can categorise each transaction (“groceries”, “health”, “coffee”) and see stats on what you are spending on what.
All that said, there is one killer feature for me which puts it in a different league: Spaces.
Spaces
Spaces are a way of dividing up or allocating money in your account – a bit like having another bank account, except it’s all the same physical account underneath. This may not seem like such a big deal, but it is has been a revolution to me. It doesn’t really give you anything you couldn’t do with multiple accounts and/or spreadsheets – except that you don’t need multiple accounts or spreadsheets!!
The important functionality is:
- Spaces are named, and each has its own balance
- Standing orders and direct debits can be paid from a space
- You can set up virtual debit cards, which pay directly out of the space
- You can automatically regularly transfer money in – either to top up to a set balance, or to pay in a set amount
- The money in spaces is still physically in the same account, so attracts interest (or, at least, it did) and means you can go ‘overdrawn’ in your main balance without any fees, if there is enough money in spaces
- If you don’t have enough money in a space to pay a standing order, it will notify you, as as long as your transfer in money the same day, the payment will be made.
It’s probably easiest to explain how I use them
- I have a tithe space – every month 10% of my salary gets transferred in, and then subsequently most gets sent by standing order from this space to church, mission partners, or whatever. If any surplus builds up I can see it, and make sure I give it away at the appropriate opportunity.
- I have a bills space – every month the space is topped up to the amount needed to cover all my regular monthly bills (council tax, mortgage, phones, electricity), and these bills are then paid over the month directly from the space.
- I have a Christmas and presents space, which gets a transfer each month that builds up over the year. I use this money to buy presents throughout the year, and also is my budget for Christmas presents, food, cards, etc.
- I have an internet virtual space, with a virtual card that I use for all my online shopping. The balance on this space is £0, and I transfer money into the space just before each purchase. This means I don’t need to worry about my card being cloned or abused – there is never any money ‘on the card’ to be stolen, and deleting and creating a new one is 3 clicks on the app.
- I have a subscriptions space, where I have totted up all my yearly subscriptions (magazines, journals, etc), divided by 12, and transfer in that amount every month. All the subscriptions are then paid from this space as the year goes on.
- I have spaces for other annual bills (such as house insurance) which again get topped up by 1/12th each month, and paid direct from the space each year.
- I have a toy fund space where e.g. birthday money goes, which is just disposable income for video games, or whatever.
- I have a general save space, where at the end of each month I can transfer in any positive balance in my main account.
- I have a credit card space – every time I buy something on my credit card, I transfer that amount to this space. The full balance on the card is then paid off by direct debit.
- And other ad-hoc spaces if there are any pots of money I want to keep separate.
What this gives me is a main balance which always reflects the amount of money I actually have to spend (once the essentials are covered), and all my money is one place. When I was with Smile, I had a tithe current account, and two or three savings account. But you had to remember which account number was which, and they each had different statements, chequebooks, cards, paying in slips, …
Cons
Of course, nothing is perfect, and there are some things I don’t like about Starling.
- It is essentially app only – if my phone dies no bank account access
- No chequebook (but then I can’t remember the last time I wrote a cheque)
- The spending stats are a nice idea, but I don’t find they work very well with spaces
- The statements are slightly awkward to access, and don’t have any reference to spaces
- They no longer pay interest on their current account
That last one is actually a pretty big deal, as I will typically have several hundred pounds across my spaces. As they were all accruing interest, this was fine – no need for separate saving account.
Also worth saying it is online only – so no branches. Cheques can be paid in using the app, but cash has to go in via the Post Office.
So..
I really enjoy being a customer of Starling bank (and I have never previously said that about any bank). I am aware that all of the above assumes having enough money to make ends meet, and I don’t take that for granted.
But the app is a pleasure to use. I am on top of my money without any real ongoing effort now it’s all set up.