Kroo launches current account paying 3.6% AER interest, but is it any good?

Kroo launches current account paying 3.6% AER interest, but is it any good?

With its impressive rate on cash balances, is this challenger bank right for you?

Good for

  • High interest rate on up to £85,000
  • Fee-free overseas spending
  • Instant payment notifications
  • Decent budgeting features
  • Easy to use app

Bad for

  • Fee-free overseas cash withdrawals are limited
  • Not part of official 7-day switching service
  • Doesn't support joint accounts
  • Can't hold non-GBP balances

Editor's Rating

4.5/5.0

Kroo is the latest challenger bank to shake up the UK current account market. Its newly launched current account offers fee-free overseas spending and pays an impressive 3.6% interest on cash balances.

So, how do the features of Kroo's new current account stack up against other accounts available right now? Let's take a look.

Who are Kroo?

Kroo is the latest in a long line of Fintech challenger banks attempting to disrupt the UK current account market, similar to the likes of Starling, Monzo, and Atom Bank. They were founded in 2016, but only secured their full UK banking license last year.

Take a look at the Kroo website and you'll notice the bank is keen to portray an environmentally-conscious image. Kroo says it plans to plant 1 million trees by the end of 2023, and will plant two trees for every new customer that signs up for an account.

What does the Kroo current account offer?

Like other challenger banks, Kroo has seemingly gone out with all guns blazing with its initial current account offering. Here are its main features:

1. 3.6% AER variable interest on cash balances

Kroo's app-only account pays a near market-leading interest rate of 3.6% AER variable. This is paid on balances up to £85,000 which is impressive when you consider other high interest current accounts typically limit the amount of money you can earn high interest on (as we discuss below).

2. Fee-free overseas spending

In addition to its heading-grabbing savings rate, the Kroo debit card allows you to spend on it overseas without encountering fees. You can make fee-free overseas cash withdrawals too, though a 3% fee applies if you take out more than the equivalent of £200 from a foreign ATM in one month.

3. Instant payment notifications & budgeting help

Like most other digital banks these days, Kroo's mobile app offers instant payment notifications, categorised spending to help with budgeting, plus the option to split bills.

As you'd expect, standing orders, faster payments, and direct debits are all supported too.

How does the Kroo account stack up?

Given its competitive offering, there's little doubt Kroo is seeking to grow its customer base quickly. Here's a brief analysis of how its savings rate and fee-free overseas offering compares to other current accounts out there.

Savings rate: Not market-leading, but close

While Kroo's generous 3.6% AER variable interest rate isn't technically the highest available, the fact it offers this good rate on balances up to £85,000 is a huge plus point. For example, Nationwide's FlexDirect account is known for its market-leading fixed 5% AER interest yet. Yet this account only pays this rate up to a measly £1,500. The 5% also only applies for one year — it drops to just 0.25% AER variable after. Nationwide also requires account holders to pay in £1,000 per month. There is no such stipulation with Kroo.

Meanwhile, Barclays offers a current account with a linked savings account paying 5.12% AER variable interest. While this rate is also higher than Kroo, you can only earn this on balances up to £5,000. You earn just 0.15% AER variable on any balance above this. You also need to pay in at least £800 into the account each month.

Barclays' high savings rate is also only available on its linked savings account. This means you must manually move over cash from your main current account to earn it. Because of this, Barclays' offering isn't that similar to Kroo. That's because Kroo doesn't require you to open or transfer your savings a linked account.

Similarly, Chase Bank will be increasing its savings rate to 3.3% AER variable for its current account customers. However, like Barclays, interest is only payable on its linked account. Cash kept in Chase's main account will continue to earn zero interest.

All-in-all, if you're looking for a bank account to earn interest, then it's hard to argue against opening a Kroo account — especially if you've more than £5,000 saved. Just be mindful that Kroo's interest rate is variable, so can change at any time, though you'll be given at least two months notice if it does.

On this point, we should also point out that if you're solely looking for somewhere to stash your cash right now, there are easy-access savings account out there that current beat Kroo's 3.03% rate — though only by a small margin. Take a look at our best savings accounts guide for full details.

Fee-free overseas usage: Falls short on overseas cash withdrawals

While bank accounts offering fee-free overseas spending are becoming more common, there are still a number of high street banks, such as Lloyds, Halifax, and TSB, which continue to charge customers a fee in the region of 3% for the privilege of spending abroad. Because of this, Kroo's fee-free overseas spending feature shouldn't be taken for granted.

It is worth knowing, however, that you may come across an overseas fee with Kroo if you make a habit of withdrawing from an overseas ATM. That's because Kroo only allows you to take out the equivalent of £200 each month from a foreign cash machine before a 3% fee applies. This is quite a low limit, and doesn't compare too well with Chase, Starling, or Monzo.

For example, Chase Bank's debit card allows you to withdraw up to £1,500 per month from an overseas ATM. Starling limits you to £300 a day which is enough for most, while Monzo allows unlimited withdrawals within the European Economic Area (EEA), and up to £600 per month outside of it.

So, if you usually spend on your card abroad then Kroo's overseas offering is probably adequate. However, if you prefer a wallet full of dong, dirhams, or dollars when you're overseas, then you may be better off with a different account.

What are the drawbacks of Kroo?

While Kroo's new account boasts some nifty features, there are a few drawbacks related to its current account.

Firstly, the bank isn't part of the official 7-day switching service. This means if you're switching from another bank it will almost certainly take longer than 7 working days. You'll also have to manually move over any automatic payments yourself, such as standing orders and direct debits.

Kroo also doesn't support a feature that allows you to send money abroad, or convert currency within its app. Joint accounts are also not supported.

It should also be highlighted that Kroo's account doesn't offer a competitive overdraft. Both arranged and un-arranged overdrafts are charged at 24.9% EAR variable. So, if your current account is often in the red it's probably best to give Kroo a swerve.

Also, we've heard reports that it was taking some customers a while to get a new account Kroo account opened—presumably due to an influx of new customers attracted to their product. A member of our team has personal experience with this—it did take a couple of weeks to open but their account was credited with £10 and they were emailed an apology, even though they never complained. A recent review of comments on Trustpilot does show that as of mid March there are customers getting approved in just days, so it looks like they're getting through the backlog. This may have affected customer service as well. If you have any personal experience with this, please let everyone know in the comments section below.

How do you open a Kroo account?

If you want to open a Kroo account you'll be pleased to hear the process is pretty straightforward. Simply download the Kroo app from the app store of your choice, input your personal details, and confirm you're a UK resident.

Once done, you'll be prompted to provide a picture of your photo ID, such as your driving licence. For verification purposes there's also a video step to complete where you'll need to record yourself reading out a predetermined message. Once complete Kroo will validate your video against your ID and undertake a soft credit check. This process would typically take up to several days—although it has taken longer for some customers.

When approved you can expect to receive your Kroo Visa debit card through the post. Once the plastic is in your hands you'll be able to activate your card and set your PIN through Kroo's mobile app.

Are you looking to move bank account? For an updated list of all the top current accounts out there, take a look at our best bank accounts guide.

Karl Talbot

Karl is a personal finance expert who specialises in writing about savings accounts, credit cards and cheap personal loans. Karl has worked for a number of personal finance publications including The Motley Fool and MoneySavingExpert.

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