Starling Bank Review

Starling Bank is a digital, mobile-only challenger bank based in the United Kingdom. It focuses on current and business account products.

Pros & Cons

Before opening a Starling Bank account, consider the advantages and disadvantages before doing so. 

For all you international business owners (or those who have multiple passports and need international bank accounts), it might be a good idea to find a non-U.S. based bank.

In the United Kingdom, the banking industry has been catching up with the times to accommodate consumers who are increasingly using their mobile phones.

Since that’s the case, it makes sense to have a bank where you can manage your finances straight from an all.  There are a bunch of banks (referred to as 'challenger banks' in the U.K.) that have risen to the cause, helping to make it more convenient and less costly to use — Starling is one of them.

In our Starling Bank review we’re going to take a look at the bank’s features, fees and who it’s a good fit for.

What is Starling Bank?

Starling Bank is a mobile-only bank that’s based in the U.K. Founded in 2014 by Anne Boden, the current CEO, Starling represents an opportunity to deviate away from the way traditional banks are run. 

The bank raised £48 million after an investment round two years later in January 2016.  In July of that same year, it got their banking license from the Financial Conduct Authority and the Prudential Regulation Authority. 

It’s also the first bank in the U.K. to join the Single Euro Payments Area (SEPA).  The founder is the first female founder of a British Bank.

Before Starling, she worked at roles such as for RBS as the head of EMEA, Allied Irish Banks as the COO and Executive Vice president for ABN AMRO.

The bank won the best current account provider and best British bank at the British Bank Awards in 2018, 2019, 2020, and 2021. Starling has also been awarded numerous Best Business Banking Provider awards by a host of industry bodies in the UK.

Currently, there are over 2.8 million customer accounts held with Starling.

How Do Starling Bank Accounts Work?

Starling Bank’s app focuses on the basics — it’s pretty intuitive to use, offering a minimalist design so you can find exactly what you need.

Sections are organized by tabs where you can access their features.

These include:

• Add money - You can make deposits with no limit using online banking or their “Faster Payments” feature.
• Payments - This is where you can transfer money. You can even transfer money that’s pending with your old bank. You can also look at Direct Debits and standing orders here.
• Spending - This section will let you see your transactions which are divided into different categories. That way, you can see what you’re spending your money on, helping you figure out what you can tweak to your budget moving forward.
• Marketplace - Starling has partnered up with various third-party Fintech companies to offer consumers ways to shop around for mortgages, pensions and insurance.
• Goals - Think of it as a digital piggy bank where you set a goal then set aside money, encouraging you to save. You can do this automatically or manually.
• Overdraft option - If you’re eligible, you’ll be offered a fixed-rate Starling loan in case you overdraft (like a line of credit) or an overdraft facility. 

Account holders will also get a physical bank card after signing up.  The Mastercard debit card is pretty much your standard card, where you can withdraw cash from ATMs to make payments. 

If you want to deposit cash, you can do it at any Post Office in the U.K. since Starling doesn’t have any physical branches.

You can activate your debit card right in the app.

Types of Accounts

Starling Bank offers a few basic type of accounts suited for various needs:

Personal Bank Account

This is the account that one at the 2019 British Bank awards. Their savings account offers basic features like the ability to make electronic transfers and ATM withdrawals.

You’ll also earn 0.5% AER (annual equivalent rate) for amounts up to £2,000 and for amounts up to £85,000. Another feature of the app is that you can turn on option overdraft.

If you take advantage of it, you’ll be charged starting at 15% AER for the amount you borrow.  Once you’re approved, you can set a limit as to how much you think you need, but you can turn it off whenever you want as well.

There is also a personal loan option if you have an active overdraft — borrow anywhere from £500 to £5,000. Rates for these loans range from 11% and 15%. 

You can open an individual or joint account. That way, you can manage your finances together. To sign up, you’ll need to both have a personal bank account then be near each other after opening the app.

Then Starling’s app will use Google Nearby Technology to locate your partner and add them to the joint account scanner by. 

Teen Account

You can help open an account for 16 or 17 year olds.  This type of account offers features much like a full Starling account, except for the ability to receive overdraft protection or take out loans. 

Euro Account

If you receive or send euros regularly, this type of account is for you. You’ll need a personal bank account first, then open the app and opt to get another bank account like you would when opening a joint account.

Once open, then you'll receive a unique International Bank Account Number so you can make international transactions.

When converting pounds to euro or vice versa, you’ll be subject to the true exchange rate alongside a 0.40% fee.

Business Accounts

A Starling business bank account has all the features you’ll get with a personal one and also has no monthly maintenance fees.

However, fees you’ll pay include £3 per deposit and £0.50 per withdrawal on a business account. If eligible, you can get business overdraft. The business bank account integrates with various accounting software tools such as FreeAgent and Xero.

Since it is a business account, it will take a bit longer to open than a personal one.

Features

Now that you know what type of bank accounts you can open at Starling, let’s talk about the different features these accounts offer.

They’re there to help you manage your money better and see what ways you can improve your financial life. 

• Goals -  the name is exactly what it does: helping you set aside money for your goals. Think of these as savings buckets. To create one you’ll need to go into the “spaces” section in the app and tap where it says to create a new goal. Then set a target amount, and start adding money manually or automatically, or round up your purchases and transfer that amount. 
• Overdrafts – If you opt into overdraft protection, whatever amount is taken out will be charged starting at 15% AER, accrued daily and charged on the 15th of the month. Your interest will be waived if the total interest charges are less than £10 and you overdraft by less than £2.
• Spending insights -  You can log into your app and look at personalized data about your spending habits. This includes how and where you’ve been spending by sorting your transactions into categories. Some of these categories include entertainment, eating out and transportation. You also have the option to see other details such as the merchant and how you paid for your purchase.
• Nearby Payments – Powered by Google Nearby, you can use this feature to send money to other Starling Bank account holders without needing to get their personal details. Simply open the app, head to the payments section and locate the receiver over Bluetooth, then send the cash.
• Card Controls  – You can freeze and unfreeze your card, helpful for when you believe your card is lost, misplaced or stolen. You can also block online payments, contactless, chip and pin payments as well.
• Settle up – Account holders can own a profile when requesting money. It’s a unique link you can send to others through your app. For Starling Bank customers they can send it through their accounts. Otherwise, the sender can pay using their debit card. The Settle Up feature is also useful when you want to split bills, though you’re limited to £250 in payments each day.
• Instant notifications – You can set up instant notifications on your app for certain transactions like when overdraft kicks in or your card has been used. That way you can see unknown transactions much more quickly and monitor fraud.
• Personal loans – This feature can be activated if you already have overdraft protection. You can apply for a loan up £5,000 to within minutes and borrow as much up the limit and make payments using your personal account. Rates vary between 11% and 15% and there are no prepayment penalties.

Fees

The good news is that Starling Bank doesn’t charge many fees compared to your standard traditional bank.  You don’t need to pay for basic banking services and transactions.

This includes monthly maintenance fees and domestic and international ATM withdrawals.  Cash deposits at ATMs are also free but you’ll need to head to the local post office to do so.

Domestic money transfers are free but international money transfers are charged.  The fee will depend on how much cash you send and the country you’re sending it to. 

Another fee is what you’ll be charged for overdrafts. Depending on your credit score, you could be charged 15%, 25% or 35% EAR. 

Starling offers an arranged overdraft option. Interest is calculated daily and charged starting at 15%, 25% or 35% EAR (variable) based on the customer’s credit score.

There are no additional charges for un-arranged overdrafts - which is rare with a UK bank account.

Is Starling Bank Safe?

It’s natural to wonder if your money will be safe if you go with a new bank like Starling.  Since the bank is covered under the Financial Services Compensation Scheme (FSCS), you’re covered for up to £85,000 if Starling goes bankrupt.

Plus, Starling is regulated by the Financial Conduct Authority (FCA) - meaning you get access to the Financial Services Compensation Scheme should you fall victim to fraud.

The bank is also adhering to the Contingent Reimbursement Model (CRM) code, a voluntary industry code that indicates it’ll refund any authorized transactions made from your account. 

It’ll also refund you in the event you’re scammed by someone into sending money voluntarily.  Let’s not forget Starling’s app and card, which has a few security features to help protect your account.

First, you’ll need to provide video and photo ID in order to complete your registration.  You can deactivate (or freeze) your card within seconds in the app and you can also contact customer service immediately for help.

Finally, you can opt for transaction notifications (including home screen notifications so you’re alerted to any suspicious activity.)

Compare to Other Banks

Should You Sign Up For Starling Bank?

Account holders who have used Starling Bank rave about how easy and convenient it is to use.  The app is simple to use and efficient since you can get to the features you want.

Even though it’s new, Starling is working on offering more features.  It’s also a great bank if you want to travel overseas since it doesn’t charge fees for ATM withdrawals or foreign card bank payments.

Those who want other features like in-person customer service or use cash a lot might not like it, but it’s a great supplemental or main bank account nonetheless.

If you’re comfortable around a smartphone and want a bank with no monthly fees, then give Starling a go.