Dear Monzonauts! Thank you so much to all of you who took the time to speak to us or take the test about overdraft pricing. We collected a lot of interesting opinions and views - as always, your feedback was incredibly helpful!
So… I wanted to give you a quick update of where we are and a sneak preview of the results.
We tested several pricing options, including interest rate, fee per day, tiered fee per day, a mix of monthly fee and an interest rate. Currently the two leading options are 50p per day and 1p per £10 (calculated on the balance at the end of day) with a monthly cap for each of the options.
Those we spoke to greatly valued transparency and simplicity. Both 50p per day and 1p per £10 were chosen primarily because they make it very easy to work out how much an overdraft would cost. At traditional banks, customers often only find out how much they have to pay for their overdrafts at the very end of the month.
A lot of you noted that there isn’t a strictly cheaper option between the two because it depends on how the overdraft is used. We were also really grateful to hear that some of you are keen to switch to the Monzo current account once it is available, while also recognising that because Monzo helps you save and manage your money, you would not really mind what the price of an overdraft would be.
Although the majority of the votes were roughly divided between these two options, we will continue thinking about what would work best taking into account your feedback, other products we may launch, what would be most intuitive in our app, various compliance constraints and our revenue requirements. We are also aware that we have spoken to only a limited group of our customers, so we will continue testing and collecting feedback to find the right solution.
Stay tuned and please share any ideas or feedback!