Apparently, if a transaction is flexed and split into multiple payments, even if the transaction is then refunded within the same billing cycle it would still be charged interest nevertheless and there is no option to change instalment cycles anymore as according to Monzo “The refunds are technically a payment towards an instalment”.
I am not even sure if this is legal? I’ve paid for something and didn’t care to split it into three because I was sure the transaction will be refunded in a day or two as it didn’t go through.
But I’m being charged interest because Monzo has a different way of defining refunds as technically payments? I can understand if the refund was after the billing cycle but it’s not.
Does anyone have anything to pitch in here? I really think Monzo has a very bad implementation of Flex Refunds.
Also strange that as referred in a previous issue, I cannot choose a Flex transaction while contacting support and have to go through hoops to talk about a flex transaction.
Although the amount of interest charged is negligible, I wanted to raise this as it could potentially be an issue at large?
Attachments:
Transaction page showing instalments and interest.
This is why I don’t use Flex. I’m not familiar with the rules and regulations around all this, but I’m sure it’s nothing untoward – nonetheless it’s a very customer-unfriendly approach that just looks like penny pinching to me.
Though Occam’s razor might apply and it’s just simply how they built the flow to only account for the most common circumstances and they can’t revert the plan to interest free even if they wanted to.
That’s because Flex is a BNPL product manifesting itself as a credit card* - and works differently to the more traditional ones.
To prevent this in future, I’d suggest you choose an installment plan that’s interest free even if you know you’re going to get a refund. Or, get a more traditional Credit card where you just need to pay off in full before the next billing date.
It’s legal, as I understand it, but this is why I also don’t see Flex as an option CC wise - it’s too much faff for me.
So, in my case since the loan has been split into multiple instalments for a while until my refund was issued, I’ll be charged the interest even if the transaction has been refunded before the billing cycle is complete?
Like you said this is different from how other credit card providers handle refunds issued within the same billing cycle if I’m not wrong?
Flex is not a credit card in the traditional sense, it’s a BNPL product masquerading as a credit card. They have built it up to be, in essence, a credit card, but it’s still built around its BNPL roots.
You need to look at what Klarna and co are doing, not Amex and Barclaycard.
Umm except that, the refund was issued on to the same card? Saying monzo’s got nothing to do with it is a bit of a stretch isn’t it? Also, since Flex was marketed as a credit card rather than a BNPL product, it was safe to assume it’ll be handling refunds within the same billing cycle like other credit card providers do?
Also, even so, this whole interest with refunds thing could be avoided if Monzo offered an option to change instalments for purchases within the same billing cycle (even if refunded) right?
Yes I’ve seen the same issue on another payment where it was fully refunded and like others said I understand the partial refund was due to the foreign currency rates fluctuations.
But my point is that, even though it was considered a partial repayment, shouldn’t Monzo offer an option to change the instalments as it’s still within the same billing cycle?
Yes, my point was more about Monzo not allowing to change the number of installments even if it’s within the same billing cycle only because it was refunded.
Yes, I can understand this as this would be exactly what would happen in the case of PayPal credit or Klarna.
But I believe they still offer to change the instalment plans if still within the first billing cycle irrespective of whether a payment is made towards the purchase or not?
My question is really about why the payment instalments can’t be changed and shouldn’t the user be allowed to change if they’re still within the same billing cycle? Seems counter intuitive.
Because Monzo. The same company who charged customers overdraft fees even when they brought their account balance back to positive before midnight because they were running their servers on a different clock, and then doubled down on it.
In this case (and most of these cases with Monzo) though I think the answer is not malice but simply that it’s because they haven’t considered this scenario when building their products from a MVP approach.
Ah, I guess my issue wouldn’t definitely fly with the Borrowing team
But I definitely think users need to be able to change their instalment plans before the same billing cycle ends. Irrespective of whether a refund/partial payment was made or not.
Just so that everyone’s clear, the remaining payment part of £0.94 isn’t just the difference between the payment and the issued partial refund (due to currency fluctuation). It also includes an element of interest £0.19.
+Original payment - £128.86
-Refunded - £128.11
+Remaining - £0.75
+Interest at 26% - £0.19
Due = £0.94
And there is no way to change the instalments for the borrowed £0.75 nor the total £128.86 because of the partial repayment albeit it’s within the same billing cycle.
You borrowed money for a few days, the charge is legitimate.
Life isn’t the free ride people want it to be sadly.
It’s in the terms you cannot change your plan down to interest free in your favour should you change your mind in any form, including refunds after 4 days.
Instalments can be changed within the same billing cycle as many times as I want.
Instalments cannot be changed after the first payment has been made.
This behaviour is based on the fact that in Monzo,
Refunds are considered as a payment towards the transaction.
Refunds lock the instalments as is.
So, how’s the user expected to know this without experiencing it first hand? As long as the user hasn’t made a payment towards the transaction why wouldn’t they assume they should be able to change the instalments on it? After all it’s still in the same billing cycle?
I dedicate the 4th of every month to Monzo and my finances and pay off everything, select instalments as needed as per my budget. This was based on the two points Monzo explicitly have informed me.
Refunds being considered as partial repayments made by the user is news and in fact not informed explicitly?
