Flex Refunds being Charged Interest

Who ever keeps flagging this, get a life :joy:

what did it say? (i’ve not been reading this thread)

If it’s the comment I think it is, it was more the hostile tone towards OP than the content of it. No, I didn’t flag it.

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So I flagged that one as inappropriate. I can’t remember exactly what your post contained that convinced me to click the flag button now, but it was something with the language (not tone) you used in the last sentence or two that I felt was a tad too hostile and inflammatory towards the OP.

I normally would have messaged you instead, but I was pre-occupied with something else. I’m sorry. :pensive:

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Just an update – I did raise a complaint with Monzo about their customer service being clueless about this and how they could have better explained that to me rather than saying I’ll be charged interest and can’t do anything about it. Mainly because I thought if a complaint was in, they would try to improve and train their support staff better with their product.

But they closed the complaint by saying that they gave me an “expected level of service”.
I’ll be sure to expect the same level of service henceforth lol.

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Sorry for asking what might be obvious, I just looked up flex interest rate, it says 29%.(Annual) not 26%.
What was the exact calculation used that resulted in £0.19 interest? (later edit I see someone else has queried this)

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Hi, I guess the only bad questions are the ones that aren’t asked. So, here’s what I found in my credit agreement:

• Interest rate Daily interest rate (variable) 0.0705%
• Annual simple interest rate (variable) 25.72%
• Annual Percentage Rate (APR) (variable) 29.0%

The annual simple interest rate is based on a 365 day year. The 29.0% indicated generally is APR which includes compounding effects and other fees.

While the simple interest rate is 25.72% which of £0.75 works out to more or less £0.1929.

I think you (or I) may have misunderstood something here.
(I can’t see how they get to a figure of .0705 daily with an APR of 29% I’ve tried several different ways of calculating the daily rate from the APR I make the figure .0698 but no matter.)

Accepting their figure: The daily simple interest rate when compounded over a year (with interest added daily) would result in £29 on a balance of £100 over a year. Annually compounded daily. That is my understanding of their daily rate calculated adding “daily” interest on the outstanding balance which when compounded daily over a year would result in £29 per 100 over a year , so for example if your outstanding was £128.86 the daily interest =£128.86x.0705/100=£0.09.08462 (or 9.0846 pence). .
Thus on day 2 your outstanding balance would be £128.86+.0908462=£128.9508462
Day 2 interest would be £128.9508462x.0705/100=£0.09091035 etc. for 365 days
If you were to repeat this for a year i.e add that to the balance and repeat for days up to to 365, you should (if their daily calculation is correct) end up adding 29% of your £128.86

The calculation you have done on the 75p would only be valid if you had 75p outstanding for a year.

The way of calculating your interest is to divide 29% by 365=0.079452055% a day which on an outstanding balance of 128.86 for 2 days =£128.86 x 0.079452055 = (0.10237 a day or 20.47 pence over 2 days.
Lots of assumptions there, we don’t know what figures they used and how many days they charged for, and we don’t have a breakdown of their calculation but your calculation is (I believe) wrong.

I think you’re missing the point of choosing instalments. When you choose to pay over 12 months, your interest isn’t calculated everyday and compounded later. It’s calculated by compounding the daily interest for a year at the time of choosing the instalment and it’ll be split into 12 monthly payments.

Technically £0.19 should be paid over 12 months but since the amount is very small it shows only one instalment as it usually does for smaller amounts.

We still haven’t had an answer from Monzo as to what happens if we pay the £0.19, will it be refunded after pro-rating it for a year or if Monzo will just keep the interest? Hopefully they might refund the interest after pro-rating it for the period the loan was active.

Your system of calculation is correct but usually interests are calculated upfront on credit products to split into even payments. Only on savings products, it’s calculated on the go.

I hope it clarifies things a bit?