Why not push people towards a temporary overdraft for emergencies
I don’t think that’s responsible. Designing a product in order to trick people into debt in order to generate revenue - i think that contradicts Monzo’s ethos, and will not go down very well with many customers and definitely not with the regulators.
To be fair, no one has suggested trickery. An overdraft can be used as an emergency measure on every other current account so it’s not an unreasonable suggestion on that basis. Falling back on what every other bank does is clearly an option.
Being extended a credit line by your bank to cover an emergency situation is precisely one of the main use cases of an overdraft. What exactly is irresponsible about lending someone some money when they’re in a jam and then charging them nothing if they pay it back once they get home (or charging them a transparent fixed 50p per day if they can’t afford to do so immediately)?
Giving them overdraft to cover emergency situations is perfectly fine, but your original idea of “pushing people into overdraft” suggests removing the ability for people to top up to avoid overdraft so that they will end up in overdraft - that to me doesn’t sound like the right thing to do.
Ultimately consumers should have the choice - either to choose to use their overdraft (and incur overdraft fees) or choose to top up their account.
If overdraft costs 50p but topping up costs £1 to the consumers, they can of course choose overdraft as it’s cheaper for them, but consumers should have the decision on what they want to do and how they want to manage their finances I think?
Maybe I’ve misunderstood what you meant by “pushing customers into overdraft”?
My question regarding overdrafts is about repayments…
Im a santander customer, just waiting for my Monzo to arrive… I currently pay £1 per day to them for the same facility which adds upto £20 a month or so for a couple of hundred pounds of overdraft… a ripoff rate indeed (monzos is certainly better, but not amazing for such a small overdraft)
I spoke to sandander and asked if i could pay it back (e.g. lower) my overdraft on a monthly basis until it was paid off and they had absoluntly no facility to offer this. Do Monzo intend to allow there customers debt relief in the form of paying there overdraft off (and lowering its limit) on any type of monthly or planned basis? or will people just be stuck with e,g, “its £500 mate, or nothing” like santander?
They seem to offer higher limits when I look at what friends have been offered by Monzo v Starling (so far I don’t have a Monzo overdraft) Plus they better value as they made a sensible business decision and went for a low % rate rather than follow a customer poll and go for a daily fee which results in paying more money