# FCA - Daily overdraft charges will be banned **URL:** \ **Category:** Monzo Chat\ **Created:** [7 June 2019 06:37 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528 "2019-06-07T06:37:11Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![anon72173902](https://avatars.discourse-cdn.com/v4/letter/a/b38774/32.png) [@anon72173902](https://community.monzo.com/u/anon72173902)\ **Post date:** [7 June 2019 06:37 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/1 "2019-06-07T06:37:11Z")
- Banning fixed fees for borrowing through an overdraft - calling an end to fixed daily or monthly charges, and fees for having an overdraft facility > **[Massive change to overdraft rules to save you money - what's just been banned](https://www.mirror.co.uk/money/breaking-massive-change-overdraft-rules-16440991)** > > Banks have been taking advantage of customers in their overdrafts for too long, and the regulator has now had enough - this is what they've just banned banks from charging you for ---
**Author:** ![rarther](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/rarther/32/11565_2.png) [@rarther](https://community.monzo.com/u/rarther)\ **Post date:** [7 June 2019 07:02 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/3 "2019-06-07T07:02:21Z")
I never agreed with Monzo’s 50p thing. IIRC their early team did some “research” years ago with a handful of users and came up with the idea that everyone loves massive fixed fees rather than prudent APRs because this standard practise is confusing to regular people. Glad this ruling has been made and now all these dodgy charging practises will hopefully end. Monzo is on the name and shame list but the worst has to be Lloyds charging around 60% APR to people in agreed overdrafts. The worst thing about them was that they had a reasonable APR before suddenly switching to the “per day” ripoff amount, trapping and locking in hundreds of thousands of customers. How the FCA/FSA//PRA etc let them go about it I have no idea. Absolutely criminal rates. ---
**Author:** ![adinus](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/adinus/32/54509_2.png) [@adinus](https://community.monzo.com/u/adinus)\ **Post date:** [7 June 2019 07:06 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/4 "2019-06-07T07:06:00Z")
I think I’ve done my calculations right… If you’re £20.01 overdrawn, the APR with Monzo is around 900% Whilst there’s an argument 50p a day is easier to understand, it is a rip off for those with a smaller overdraft. It’s a good move for the FSA to make banks all advertise overdrafts by APR so customers can properly compare overdrafts (that’s my understanding of what’s about to happen - please correct me if I’m wrong!) ---
**Author:** ![rarther](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/rarther/32/11565_2.png) [@rarther](https://community.monzo.com/u/rarther)\ **Post date:** [7 June 2019 07:09 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/5 "2019-06-07T07:09:14Z")
Who is consistently overdrawn by 1p though? I disagree with Monzo’s charging but let’s be realistic 😗 Monzo is poor but there is much worse out there. Monzo is loss making but there are banks out there milking the poor like they were farm animals. ---
**Author:** ![Rat\_au\_van](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/rat_au_van/32/49103_2.png) [@Rat\_au\_van](https://community.monzo.com/u/Rat_au_van)\ **Post date:** [7 June 2019 07:27 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/7 "2019-06-07T07:27:34Z")
As long as Monzo keep displaying the running total at the top of the feed of that months charges it will solve the problem with the APR not being easy to work out. ---
**Author:** ![Ordog](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/ordog/32/22446_2.png) [@Ordog](https://community.monzo.com/u/Ordog)\ **Post date:** [7 June 2019 07:40 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/8 "2019-06-07T07:40:26Z")
This x1000! 🙌 ---
**Author:** ![theshillito](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/theshillito/32/15218_2.png) [@theshillito](https://community.monzo.com/u/theshillito)\ **Post date:** [7 June 2019 07:48 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/9 "2019-06-07T07:48:05Z")
About time the overdraft fees were made fair. ---
**Author:** ![RogerB](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/rogerb/32/24254_2.png) [@RogerB](https://community.monzo.com/u/RogerB)\ **Post date:** [7 June 2019 07:49 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/10 "2019-06-07T07:49:05Z")
They’ll have to make the money elsewhere and I wonder what that will mean? Fees for current accounts might rear it’s head again. R- ---
**Author:** ![Ordog](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/ordog/32/22446_2.png) [@Ordog](https://community.monzo.com/u/Ordog)\ **Post date:** [7 June 2019 07:52 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/11 "2019-06-07T07:52:25Z")
I can’t see any bank charging for a current account, nevermind Monzo. O- ---
**Author:** ![RogerB](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/rogerb/32/24254_2.png) [@RogerB](https://community.monzo.com/u/RogerB)\ **Post date:** [7 June 2019 08:02 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/12 "2019-06-07T08:02:37Z")
Hopefully. R- ---
**Author:** ![Ordog](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/ordog/32/22446_2.png) [@Ordog](https://community.monzo.com/u/Ordog)\ **Post date:** [7 June 2019 08:04 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/13 "2019-06-07T08:04:37Z")
There would be a lot of backlash that’s for sure 😬 . I for one have never paid for a standard current account. O- ---
**Author:** ![kennygrant](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/kennygrant/32/65922_2.png) [@kennygrant](https://community.monzo.com/u/kennygrant)\ **Post date:** [7 June 2019 08:37 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/14 "2019-06-07T08:37:47Z")
> [@michaelw90](#): > > I have a £1000 overdraft with Monzo. When I hit £50 overdrawn, I just withdrew the rest, and put it in a savings pot to get some interest on it for the ~3 days that I was in my overdraft. This is a good illustration of what I don’t like about the 50p charge though. It’s regressive, and targets those with least with what to them are very high charges. It doesn’t help people get out of persistent debt, it penalises them. It also leads to absurdities like the above situation, where Monzo can lose money to people gaming the disparity between their percentage based interest rates, and their flat fee overdraft, which rewards people who borrow the maximum. ---
**Author:** ![JustJordds](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/justjordds/32/29498_2.png) [@JustJordds](https://community.monzo.com/u/JustJordds)\ **Post date:** [7 June 2019 08:39 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/15 "2019-06-07T08:39:10Z")
There was a somewhat _valid_ reason for the “X per day” charging structure - whilst predatory to those most likely to be in their overdraft only by small amounts every month or so, it was _easier_ to understand the consequences of doing so - albeit a huge % of what you’re actually borrowing. The guidance seems to tackle both issues - the understanding and the predatory prices (especially for unarranged). Whilst being smacked in the face with an APR%, there will be a calculator that will tell you what that means in _cold hard cash_ and I believe there will be a way to “shop around” for the best overdraft deal. It must however sting the throats of all banks (whether they were already APR% or per day models) as there is effectively no reason to have “arranged” overdrafts anymore - if there can only be one interest figure used. This is the only thing I don’t agree with as it begins to blur the lines between responsible and irresponsible lending. ---
**Author:** ![theshillito](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/theshillito/32/15218_2.png) [@theshillito](https://community.monzo.com/u/theshillito)\ **Post date:** [7 June 2019 08:50 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/16 "2019-06-07T08:50:46Z")
> [@michaelw90](#): > > I have a £1000 overdraft with Monzo. When I hit £50 overdrawn, I just withdrew the rest, and put it in a savings pot to get some interest on it for the ~3 days that I was in my overdraft. This is very relatable. When I go into my overdraft (more than £20), I’m just like “well, now I’m paying the same amount per day, I might as well buy the things I was holding back on until after pay day cos it won’t cost me any more”. That being said, I recently reduced my overdraft with Monzo with the intention of using a different bank account’s overdraft to cover for it if I fall into it again, and since that _will_ cost more the more I use it, the less likely I’m to spend even more. ---
**Author:** ![mikejhibbard](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/mikejhibbard/32/10742_2.png) [@mikejhibbard](https://community.monzo.com/u/mikejhibbard)\ **Post date:** [7 June 2019 11:14 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/17 "2019-06-07T11:14:58Z")
I think the really interesting question is the impact of this to Monzo’s business model. Monzo - at some point - has to make money like every other bank. I understood that overdraft fees were going to be a primary source of income to help achieve this, but I could be wrong? Given how generous Monzo is regarding transfer fees/withdrawal fees/FX rates it’s quite hard to see where the income is actually going to come from… ---
**Author:** ![nickh](https://avatars.discourse-cdn.com/v4/letter/n/7ea924/32.png) [@nickh](https://community.monzo.com/u/nickh)\ **Post date:** [7 June 2019 11:22 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/18 "2019-06-07T11:22:14Z")
> [@mikejhibbard](#): > > Given how generous Monzo is regarding transfer fees/withdrawal fees/FX rates it’s quite hard to see where the income is actually going to come from… Compared with other challenger banks, I’d argue that Monzo are the opposite of “generous” when it comes to fees… But regarding their other income sources, I’m guessing the “financial hub/3rd party integration” is still going to play a major role here. Taking a cut from customers who don’t want to shop around is easy money, and everyone feels like they’ve got a good deal. Not to mention Monzo Plus, which looks to be a very high margin product for them right now. This was always on the cards, and despite the argument of 50p or APR… It should result in many more people paying _less_ money to the banks, which is a good thing. ---
**Author:** ![Chapuys](https://avatars.discourse-cdn.com/v4/letter/c/e9a140/32.png) [@Chapuys](https://community.monzo.com/u/Chapuys)\ **Post date:** [7 June 2019 11:24 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/19 "2019-06-07T11:24:55Z")
I agree. It would just take 1 bank to refuse to do it and they will get market share very quickly. Its an all or nothing type of thing. ---
**Author:** ![neovo](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/neovo/32/33453_2.png) [@neovo](https://community.monzo.com/u/neovo)\ **Post date:** [7 June 2019 11:57 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/20 "2019-06-07T11:57:50Z")
Have Monzo commented on this previously? ---
**Author:** ![Ralph76](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/ralph76/32/64915_2.png) [@Ralph76](https://community.monzo.com/u/Ralph76)\ **Post date:** [7 June 2019 12:13 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/21 "2019-06-07T12:13:21Z")
> [@mikejhibbard](#): > > Monzo - at some point - has to make money like every other bank. I understood that overdraft fees were going to be a primary source of income to help achieve this, but I could be wrong? I imagine they will stop being so stupidly hesitant on their other lending products. The fact that I still can’t be offered a small loan when I’ve had all my financial transactions going through Monzo since current account beta days is frankly laughable. Not to mention, minuscule overdrafts relative to what other banks offer. ---
**Author:** ![Aaron1](https://dub1.discourse-cdn.com/monzo/user_avatar/community.monzo.com/aaron1/32/36171_2.png) [@Aaron1](https://community.monzo.com/u/Aaron1)\ **Post date:** [7 June 2019 12:18 UTC](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528/22 "2019-06-07T12:18:24Z")
Banks make money from their Mortgage book, I haven’t seen any evidence to suggest Monzo are looking at Mortgage lending. The margins on current accounts and fx transfer are tiny in comparison. [Next page](https://community.monzo.com/t/fca-daily-overdraft-charges-will-be-banned/69528.md?page=2)