Announcing the Overdrafts Preview!

And I didn’t get the email and still waiting on the preview list :man_shrugging:t2:

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So are you picking people from the list based on set criteria before going as far as credit scoring etc? Rather than going through either first come first served or names at random?

This is the part that is confusig me.

Edit: and welcome to the community :grin:

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all firms providing credit use their own rating system. There is no such thing as a credit score per se and the scores you see in TV ads are a marketing ploy to entice you to use their services

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The benefit of credit agencies are identification (do you exist), total exposure (limits/balances) and history (late/defaults). Combined they are a good indicator and additional information to a companies own history/exposure/scoring etc.

These can also be used in two ways:
Automated scoring and approval, feeding the agencies data into company models
Manual scoring, should an automated system refer than a person could review and make a manual decision.

Anyway who is anyone to question your spending because you point out a rip off overdraft. Pfft. :slight_smile:

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I wasn’t questioning spending.

I was wondering why on earth anyone would request a £100 overdraft in what could only have been the last month or so, knowing in advance what the cost will be, spend that £100, keep surplus funds away from the overdraft which is now charging, and then allocate themselves £85 a week whilst remaining entirely in what is, in truth, a small overdraft limit, deliberately costing themselves the maximum fee, before complaining bitterly on the bank’s forum that it’s expensive.

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@finitejest and @tristan - were there any updates on the overdraft batch last night? Looks like there were some errors on the e-mails that had gone out.

I was told by COps yesterday that my account was on the next batch to be processed - all many of us received were e-mails saying that our e-mail addresses could not be matched to our accounts. That is incorrect, so would it be possible for an update on this?

Many thanks
Chris

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Hello :slight_smile: you might benefit from what I have, by contacting the companies you have direct debits with, and requesting payment date changes to a more convenient date in the month. I chose the 26th, the day after payday. Having ‘cleaner’ direct debit management helps to ensure you allocate funds in a healthy way.
Overdrafts are only really a backup, you shouldn’t rely on them - the fees are a tool to encourage keeping things organised :slight_smile:

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I think you need to find a bank that will let you have a cheaper overdraft. Then put aside the money you’re saving until you’re able to not go into overdraft.

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Regardless of my poor budgeting the plan is to pay off and close my Monzo overdraft next week. Even if you’re only dipping into it occasionally the interest option is still cheaper.

Wait, haven’t you just requested an overdraft and didn’t you know the charge before you requested it?

I’m confused :neutral_face:

Did you hope that when Monzo said 50p per day they really meant 50p per month? Why would you apply for credit offered with specific terms and then complain when those terms are as advertised?

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Because I needed an overdraft at the time. I was fully on board the Monzo train. Moved all my DDs over to Monzo.

Then I looked at what Starling are offering. 2nd chance for direct debits to through at 4pm, much cheaper overdraft and ApplePay.

I’ve now moved everything back over to Starling. I badly want Monzo to be the better choice.

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You’re right, it is cheaper. But :monzo: Monzo have never aimed to be the cheapest. They’re taking a different approach, by being able to predict with certainty exactly how much an overdraft until you’re next paid will cost you, something that’s impossible with a percentage rate.

Tom firmly believes people are emotional with money, and will budget better with this information, despite it not being economically the best value option. He’s given a good argument and I back him, even though, at the outset, I was very vocal about 50p/day not being anywhere near the pence that a traditional APR% would cost.

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My main issue with overdrafts is the cost and the small limits. I know it’s all about being clear but for example say I have a £100 overdraft limit which appears to be what most people have been offered, I know that if I was in it, it would cost no more than £15.50 for the month and that’s fair enough and very clear . However with starling for example they use a % which for me is 12% so I don’t know what my fees will be exactly, but using the full £100 overdraft I know it won’t cost me anymore than £1 a month and that’s if I used the whole amount so there is a massive difference in my opinion and I would prefer a % based system rather than a fixed daily fee, unless the daily fees were a lot lot cheaper.

I don’t use an overdraft often, but it is nice to have just in case I am caught short at the end of the month.

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If you were to compare annual cost to you of borrowing Monzo (186%) vs Starling (12%) you’re right that there’s a huge difference

That’s assuming you’re using all of your overdraft all the time (if you weren’t Monzo would come out even worse)

For my personal situation I’m actually okay with the 50p fees - as I would never use the overdraft for very long. If I fall into it one month then I’ll adjust what I’m doing so that next month I don’t. It’s more a safety blanket for me so I can budget more aggressively to get more into savings on a monthly basis

If you need to borrow regularly there are better options than even the best overdrafts

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The lower limits reflect that ‘emergency dip-in use too, I think.

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Ok I get your point now @hailstorm the issue isn’t so much the charge, it’s the unexpectedly low limit which means 50p per day is a horrible, horrible rate of interest. Yeah, got it.

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100% agree — we’ll be working to increase the limits over time. Those of you who have them now are very much part of the preview where we’re super conservative :slight_smile:

Who decided that fixed fee is better than APR (15-20%)?
Fixed fee (50p) will be better only if you are overdrawn more than £1000-£1500

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Could it not work that an OD work on a APR% (15-20%) but the MAX daily fee will be 50p/day… so if you only use a bit you’ll get a small fee but if you use it all you know no matter how much you use it will never be more than 50p/day?

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