Disagree with most views posted on this one, and think Monzo are onto a good thing. Personally in my view, I think this is because there are typically two different types of overdraft borrowing; short term borrowing (i.e. we project that you will run out of money within 5-10 days of your next payday, would you like a £XXX short term overdraft facility to tide you over?) and longer term borrowing (you have moved your whole current account to Monzo, direct debits, salary etc. and treat it like your HSBC/Barclays/Lloyd’s etc. account. After demonstrating yourself to be a good credit risk, you are granted a ‘permanent’ overdraft of £Xk – similar to the overdrafts you currently have).
I think the 1p per £10 lends itself really well to the former, it might work out as higher %APR than current banks depending on the situation, but it’s super convenient (pre-emptive app notifications rather than ringing up a bank for half an hour to secure a £XXX overdraft that will likely only be used for a few days) and I think it’s warranted a premium be paid for that. 50p per day lends itself more to the latter, and those that use overdrafts constantly may find that is significantly cheaper than their current overdraft arrangements. I think what people are querying in terms of whether this would be fair in practice will largely depend on which type (short/longer team) overdraft you are granted.
I think Monzo’s approach is sound. Super excited about the current accounts, and can be available for a chat/Skype to discuss further if helpful
Interest free buffer is a nice touch.