@craigy Starling has one of the best overdraft options out there I think, if I’m ever in need of an overdraft, I’d certainly use Starling’s offering over Monzo’s (then probably transfer the amount over to my Monzo account…)
It’s true, Monzo isn’t the cheapest. But it has never claimed it would be. I believe Tom Blomfield when he says people are emotional, not economists, with their money. There is something to be said for his belief that “your overdraft this month will cost X” is more appealing than a variable amount charged a month in arrears, mentally already detached from the actual borrowing.
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I think more than it just being more appealing, it is more useful.
As a customer, needing an overdraft in an emergency situation (say my wages didn’t come through on time and I need to pay a bill), I want to be able to see clearly how much my overdraft will cost me without having to sit down and break out Excel. I understand the concern that fixed rate my encourage high borrowing but certainly from a UX perspective, I think it is probably the way to go.
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Well, personally I don’t care to know in advance how much my overdraft is going to cost me, if I know that I’ve got the best deal. All I need to know in advance is that my First Direct, Starling or Nationwide overdraft will cost me a lot less than Monzo. I don’t need to ‘break out’ Excel, I’ll just pay the charge when it’s applied, if I’ve already done the difficult bit and worked out who will be cheapest, but if it works for you, and the billion other customers, great. And if if you being happy to pay more keeps Monzo in business for me, even better.
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How do you know this if you don’t calculate it 
I have calculated it. I know my overdraft is cheaper than Monzo up to £1300ish. And I know I never use that amount. I don’t need to work out every month what it’s going to cost each time, as I already know it’s cheaper than Monzo. But like I said, if you, and the majority of folk find it “more useful” with a flat rate of 50p a day, then good for you.
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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.
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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)?
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Especially if you get a push notification immediately letting you know you’re overdrawn. It’ll make it much harder to accidentally end up paying for credit you don’t want
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”?
I’ve moved the previous 5 posts from here:
since we’re starting to get into the rights and wrongs of overdrafts as a form of emergency credit rather than discussing the costs of debit card top-up.
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?
Thanks 
What is actually happening with Monzo overdrafts? Does anyone actually know?
They were “launched” in August and considering this is probably the first way Monzo is going to make money, they are taking an awful long time to roll them out to the masses?
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A small overdraft is all I need to be able to use Monzo with no worries at all.
It’s already my main (only) current account.
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Overdrafts on my acocunt has gone live… £100 limit - seems a bit tight!
Is the limit a maximum as it’s a beta product, or been calculated based on my usage?
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How do you get/active the overdraft?
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I see this in the help section:
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Yea I saw that - previously there was just a button to access it.
Interestingly the text is identical on Android - but the button is missing!
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