Kroo Bank review – ethical digital banking

Kroo is the UK’s newest bank. Having gained its banking licence in July 2022, it launched its first proper bank account in December 2022.

In true Money Saving Answers style, we signed up to be a guinea pig so we can tell you all about the account in this Kroo bank account review.

What is Kroo?

Kroo bills itself as a bank with a conscience and aims to be the ethical choice when it comes to digital banking in the UK. It was founded in 2016 and offered an e-money account until 2022 when it was granted a full UK banking licence.

This ethical stance is at the core of its proposition and in 2023 it aims to plant two trees for every new customer that joins.

How much does Kroo cost?

Kroo is completely free to join and use. There are fees when withdrawing more than £200 a month via an ATM, and for sending some specialist payment types (such as CHAPS) but otherwise it’s completely free.

Of course, it’s still early days, and many banks which started out offering free accounts later introduced paid subscriptions and reserved certain features solely for those subscribers. Monzo is prime example of this.

Opening a Kroo bank account – plus £30 cashback

Kroo is currently offering a £20 welcome bonus to new account holders. To get the bonus you need to sign up to Kroo via TopCashback and deposit at least £50 into your Kroo account. 

If you’re not already a TopCashback member, you can sign up to TopCashback via our link to you’ll get a £10 bonus from them too. That’s £30 for about 5 mins work. 

As an all-digital affair, opening an account with Kroo is as straightforward as it comes. It shouldn’t take more than 5 mins from your phone.

You must be resident in the UK and provide official photo ID such as a Passport, driving licence or EU/EEA ID card.

You will then need to take a short video (via the app) repeating the words on screen when prompted. This is used to biometrically match your ID.

Once you’re done, Kroo will validate the information. They say this can take several days, but in reality, it takes anything from 30 mins to an hour or two depending on how busy things are.

If your details can’t be validated you’ll be emailed and asked to provide more information, such as a bill showing your current address, a letter from HMRC, or a bank statement from a highstreet bank.

There is a soft credit search, but this isn’t something that affect your ability to gain credit in the future in any way.

Once verified, your new Kroo Visa card will to be sent to your registered address. Typically, this would be with you in 5 days but with watch out for strikes at Royal Mail.

Card activation is handled via the app and is a simple as confirming a code, and the pin is set within the app during the onboarding process. This is a nice update from the older Kroo account (before it became a bank) where the pin was previously posted out to you.

Kroo bank benefits:

Customers joining Kroo will enjoy a full UK bank account with visa debit card that is compatible with android and Apple Pay. In addition to regular banking activities such as direct debits, standing orders, faster payments, and debit car depending, the Kroo account also offers the following benefits.

3.33% AER interest on in credit balances

Rather than launch a separate savings account (as Starling has recently done) Kroo instead is offering 3.33% AER interest on in-credit current account balances. The interest is paid monthly, and on a deposit of £1,000 would earn you £30.30 over a 12 month period. This offer is unbeatable on a current account at the moment.

It is an interesting approach which could lead to some customers earning more interest than they otherwise might, as it will be paid on their total balance rather than the money squirrelled away in a savings account.

The flip side however is that many like to physically or virtually separate their savings and expenditure which for now isn’t something Kroo caters for.

Tip: Higher rater tax payers should bear in mind that at these rates deposits of £16,500 would stand to earn close to £500 in interest, which is the limit of the tax free interest allowance. Any interest earned over this in any account baring an ISA will be taxed at 40%. Basic rate tax payers can earn up to £1,000 tax free interest. 

Fee-free foreign spending

Fee-free foreign spending has been a recurring theme of challengers since the early days of digital banking. Kroo doesn’t disappoint here, and even dedicates a page on its website to foreign travel.

It promises zero fees on all foreign purchases, with zero mark up, and uses the Visa exchange rate on card purchases. In that regard it matches Chase, Monzo, and Starling.

Where is falls down a little is in the ATM withdrawal limits. Currently customers can only take out up to £200 equivalent every month without incurring a fee. Any withdrawals over this are charged at 3%. That falls someway behind Chase’s newly increased £1,500 limit (on foreign ATM withdrawals), and even Starling’s £300 daily limit.

Unfortunately, there’s still a few countries where the Kroo VISA card won’t work. The list of unsupported countries is now mostly limited to those outside of the international banking system, but does still include destinations such as Iceland, Jamaica, and Bahamas.

If you don’t already have a top debit or credit card for foreign spending, then Kroo can fill that role for the most part.

In-app budgeting and spending control

Kroo offers instant payment notifications, categorised spending, and the ability to split bills with friends. These features will be familiar to anyone with a digital bank account, but still aren’t very common with traditional banks.

Kroo doesn’t yet have pots or spaces à la Monzo or Starling, but in future hopes to use predictive technology to help track your spending in real-time enabling you to make better financial decisions, and notify you of upcoming payments.

Ethical banking

“For over a century, big banks have been reaping financial benefits, even at the expense of customer losses and harm to the planet.
We built Kroo to address this imbalance. We want to improve the relationship people have with their banks and money and, ultimately, give them more financial independence and control. Our goal is to be a bank people truly trust and love.”

Kroo is trying to appeal to the more environmentally minding customers. It has teamed up with charity One Tree Planted, to plant two trees for every new customer it gains in 2023.

Is that enough to call it an ethical, socially conscious bank? Starling already has a partnership with Trillion Trees and has planted over 85,000 trees based on customer referrals. Of course, this isn’t a competition, but if a company is emphasising its environmentally friendly stance, then we expect more. Especially given the competition from Triodos, which recently won Best Ethical Financial Provider at last year’s British Bank Awards. Of course, the more customers that join Kroo, the more it can help.

The drawbacks

Kroo is a completely digital account, but unlike its more established competition there’s no ability at all to deposit ‘analogue’ money. That means you can’t pay in cheques, or deposit cash. That might change in the future. After all, Chase still has no way to pay in physical cash, and Starling and Monzo only added these features once they because more established.

Those looking to completely switch their banking to Kroo will also notice that Kroo isn’t a member of the CASS, and as such there is no 7-day switching service available. For now though, that is probably for the best while the bank focuses on developing its core services.

There are also no international payment options. You cannot send or receive any payments abroad into your Kroo account. If that is something you need, we’d suggest opening an account with Revolut and then transferring money from there, to your Kroo account. If opened via our link you’ll also get three months free premium.

For UK based transfers, it’s also worth pointing out there’s no confirmation of payee yet. This is again something Kroo hope to add at a later stage. In the meantime you’ll want to double and triple and check the details of the person you are sending money to, just for peace of mind.

Is Kroo safe?

Kroo is a fully licensed UK bank, regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) which ensures that it meets certain standards and requirements to operate. It is covered by the Financial Services Compensation Scheme (FSCS) which means that your deposits are protected up to £85,000.

The banking app itself uses secure data encryption to keep your details safe, and like most accounts these days, you can turn on or off various aspects of the card.

Is Kroo worth it?

As a fee-free account we’d have to say yes. Joining takes all of 5 mins of your time, costs you nothing, and does some good for the environment.

Beyond that though, it doesn’t yet offer much that can’t be found elsewhere from more established banks.

There’s fee-free foreign spending, but others have been offering this for longer and with cards that work in a wider range of countries. The ATM withdrawal limits are low too, which means it’s not as useful in more cash orientated countries e.g., Germany.

The 3.33% in credit interest is a nice touch, and for many will be one of the main reasons to join, but the rate can be beaten elsewhere. For example Chip’s instant access saver pays 3.4%, while challenger bank Chase pays 3%, but is yet in increase its interest rate in anticipation of the Bank of England meeting on 23 March.

As Kroo becomes more established we are likely to see more features and innovation, but at the moment, we can’t see the benefit of opening a new account with Kroo if you already have an account with one of the main UK digital banks such as Chase (in particular), but also Monzo, and Starling, unless you are curious, or keen to take advantage of Kroo’s generous interest rate.

For those that don’t currently have a digital bank account, Kroo could be a nice entryway digital banking, whilst keeping your traditional account to cover off services not yet offered by Kroo.

Do you bank with Kroo? Tell us what you think below. 

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