Hence my original three options about what the aim of bank borrowing should be.
It’s interesting but I think I’ve come full circle now so I’ll try not to say the same stuff all over again.
TL:DR I’m apparently against the use of fixed fees and/or unillustrated interest rates on general principle.
I had a Monzo overdraft just in case but have removed it for the moment as I can get a much cheaper overdraft from my legacy Joint Flexaccount - will revisit again when CASS for joint accounts is available as I tend to agree with the new FCA strategy
How about if there was a way to show the current owing (including interest) and a predicted owing at the end of month/pay day, based on what you have borrowed so far?
This way if you don’t have the money to get out of the overdraft right away, you could budget it in for the next month.
The FCA annouced they were proposing the following
" Ensuring the price for each overdraft will be a simple, single interest rate – no fixed daily or monthly charges."
My understanding of this is that Monzo would be in breach of these rule as they have a fixed daily charge?
(I know it isnt a rule or law yet but just curious if Monzo felt like the FCA that there current policy was unfair?)
duplicate topic, more discussion in here:
That would be good although catering for further spend in the month is difficult meaning the projection is only ever true at the point you look at it.
I’m more concerned about the up-front advertising predictions (when you really get to compare rates and make a choice if you want to) rather than the in-overdraft predictions (where you have to pay it off no matter what it costs).
I agree 50p is a very clear charge that no one could argue with expect aparently the FCA…
The FCA annouced they were proposing the following
" Ensuring the price for each overdraft will be a simple, single interest rate – no fixed daily or monthly charges."
My understanding of this is that Monzo would be in breach of these rule as they have a fixed daily charge?
(I know it isnt a rule or law yet but just curious if Monzo felt like the FCA that there current policy was unfair?)
To your point I believe 50p per day fits into “NO FIXED DAILY CHARGES”
Not if it was a real-time calculation in the app 
But yes, now I’ve re-read , this isn’t really what you were talking about. Oops!
It’s all a part of the same thing and if regulations are to put in place then thinking about the in-overdraft illustrations would also be appropriate.
Repeating the same thing three times doesn’t change my response. I’ve written too much on this topic already to repeat it and risk being banned for circular debates.
I agree - I think most consumers actually tend to misjudge interest rates more than a fixed charge. But I think what they are trying to tackle is:
Based on Monzo 50p a day used for a whole month
Customer A has an overdraft limit of £500 and uses £200 for the entire month - £15.50
Customer B has an overdraft limit of £1000 and uses £1000 for the entire month - £15.50
I think what they are trying to address is that Customer A may have poorer credit but is still paying the same overdraft charge as Customer B with a better credit rating. Fixed daily rates can disproportionately affect the least well off.
Hope this does change to APR.
Everyone should be used to comparing APR’s already for credit cards, loans etc. It’s an instant way to see if your rates are cheaper or more expensive then somewhere else in a way people already compare VS comparing APR with costs per day.
Cynical me thinks that it’s much easier for a bank to mislead someone (intentionally or not) by saying only £XX amount per day, and if it is an amount in pence it may seem cheaper, especially if someone is unsure how to work out vs APR.
Presenting a daily charge seems like a deliberate way to present something as cheaper than it actually is. I think it’s similar to those weekly payment type stores who describe items at a couple of pounds per week (when it actually costs much more and is often extortionate).
I’ll be interested in seeing how the legacy banks justify this, when it should really just be a relatively simple conditional statement.
I also think its odd there isn’t any mention of APR on Monzo’s overdraft page (i’m sure they aren’t the only ones though).
Regardless of if they choose to price per day or not. It’s not especially helpful for people to compare costs of monzo v elsewhere 
Why not change the rest of the banking world to Monzo’s model – and price ALL overdrafts as a simple, daily fee?
That would solve the comparability problem which APRs set out to do, fix the problem of ensuring people knew exactly how much they would be charged, and also make overdrafts compete on price.
I was replying to your response. That is how a discussion works.
Because thats not how we compare financial products. Should we be comparing bank loans and credit cards as costs per day. It’s odd. You just make it more difficult for someone to compare if its cheaper using their credit card vs their overdraft.
A missing/hidden/small print APR, is often an attempt to hide the costs or make it more difficult to compare.
I’m not against giving an example cost per day in addition to APR.Though I am totally against omitting APR altogether.
Another issue with daily fees is that it benefits those with large debt and it doesn’t change with the size of the overdraft i.e. easing as it becomes smaller
No as it’s more expensive for the vast majority of people.
You have evidence for that ‘vast majority’ assertion?
Here’s evidence of the average overdraft amount in the UK, which demonstrates that Monzo’s 50p per day is cheaper for the average overdraft user.