Should be visible on Credit Karma in Other Accounts section, generally at the bottom.
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Interesting that Monzo are allowed to charge for a customer entering into an unarranged overdraft!
Typically most banks don’t charge interest and have gotten into trouble for doing so in the past, especially if it causes financial hardship! I actually thought this was the rule now, as before Monzo, I wasn’t aware of anyone charging interest on an unarranged overdraft.
Not sure how I feel about that, and it highlights another ugly quirk of the flex approach. Someone called Flex predatory recently, and I didn’t completely agree, but can understand the view point a little more now. Monzo’s entire approach to credit facilities in general are starting to seem that way after thinking about it and seeing recent trends. Especially compared to traditional lenders.
They sent out a push notification the other day encouraging folks to put all my Easter holiday spending on Flex.
Seems like they’re trying exploit the yolo borrowers and squeeze them for all they’re worth. Get the same vibes from Monzo’s credit approach as I did with video game surprise mechanics. Especially after that Easter push notification, and persistent in app notification.
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Defaulting to 12 months is a lower payment than if it defaulted to 3. If you can’t afford the 12 month payment then you certainly can’t afford the 3 month one.
Not many banks give free overdrafts
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All banks can charge for an unarranged OD, some do, some don’t, keep within your limits and you’ll never hit any fees whatsoever
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What’s the got to do with anything I’ve said?
I’ve always been rather indifferent on this point. But have advocated for the ability to choose. But I wasn’t posting about that here.
All banks I know of, charge for being in an unarranged overdraft.
I understand where you’re coming from though, all comes down to risk and all else as those with Flex would’ve been checked for suitability/eligibility with the intent they’d repay or use it responsibly.
Can’t always be accurate on these things, but customers should take accountability for their own actions, everything is available to them prior to taking any form of credit out so if they choose to default or use it irresponsibly that’s on them, not the bank.
The FCA approved to allow defaulting to the longest term which is 12 payments if a repayment plan isn’t selected. This is the lowest payment possible.
The FCA also approves banks to charge for being in arranged or unarranged overdrafts.
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39% capped at £15.50 p/month.
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I wish this was capped the same for arranged 
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Used to be 
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Interesting, sounds like they’re just no longer allowed to charge more than they charge for arranged overdrafts. I’m gonna take some time to look into this a little more tomorrow.
Strikes me odd that big old corrupt and unethical Barclays doesn’t charge interest in this situation, but monzo, the more ethical of the two, does.
The big stinker with unarranged overdrafts fees and interest is that they typically apply to those who are financially poor and wouldn’t be able to afford the cost, placing them in hardship. It was a big problem a while back. Martin Lewis once described them as more dangerous than payday loans.
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Thanks Carlo, it’s not showing in my Credit Karma report (updated 14 April nor Clear Score/Check my file) but will hopefully be added at some point.
In my student days, I had one of Barclays buffer overdrafts that charged £5 per day! They eventually scrapped it but they were one of the worst for charging customers. What I like about Monzo is that they are upfront about the costs - I also received the Flex Easter advert, although I didn’t find it to be predatory - one of my credit card providers frequently run promotions during holiday periods with the campaign being delivered both in app and via email. I wonder if Monzo marketing preferences are/could be used to prevent in app notifications being delivered to customers who opt out?
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The issue is just how much is dumped under marketing. I want some marketing notifications, but not notifications like this prompting me to use my line of credit that I already have.
I think there’s a bit of a fine line here that gets blurry. There’s no special promotion they’re running here, they just want me to use it because it’s the Easter holiday, and folks naturally spend more. It feels a bit like the peer pressure I get at birthdays to drink, when it’s not something I do. This to me, isn’t marketing. But a promotion is marketing and would be different, such as telling me I can get 12 months interest free instalments on anything I flex over easter.
The wording matters with the stuff too, because there’s also fine line between explaining the existence of something and coercing you into doing something, and the easter notification is the latter for me.
That’s why I described it as predatory, particularly towards those who you’d consider YOLO borrowers, and with certain personality traits, because, much like the loot boxes I compared it to, the nature of it preys and exploits certain tendencies so you wind up borrowing more that you then can’t afford to pay back without accruing interest. It might not affect you, but that just means you’re not the target.
Flex is a rather gamified take on credit too, and the loop they’ve designed feels a bit addicting to me; it feels good to use, and that can trap you, which only exemplifies this issue. Maybe it’s just me, but when I buy something on my credit card, particularly if it’s expensive, I find it a bit daunting, which makes me think it through. But in Monzo it feels exciting to Flex stuff, and so I keep doing it even when I don’t really need to. That could just be because it’s new and I like playing with new things, but it has me feeling a bit uneasy.
It’s issues like this that leave me feeling morally conflicted with the idea of credit in the first place. Everyone deserves the benefits of a credit card, but not everyone should have or use one. I believe credit to be inherently evil, and no attempt to approach it more ethically rinses it of that.
Probably seems like I don’t have anything nice to say about Flex, but it’s just one of those things that rubs me wrong and has me re-analysing it. On the whole I like Flex. I like it, but feel a bit of unease about it. That’s where I am with my opinion on Flex right now.
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A key difference between Monzo Flex and other lenders within BNPL space, is that there’s no delayed payment period. Last year I spent well in excess of 3k on electrical goods, TVs, home entertainment systems, gaming consoles and other products for myself and family, money I wouldn’t normally spend - however due to how my store card offered BNPL terms for each item, I was able to stagger the start dates and pay the balance off in full without paying any interest!
I can appreciate the unease, for me I feel Flex is better structured to promote responsible borrowing (even with the under £30 limit) Using my spending last year as an example is not possible with Monzo Flex, your instalments are set up and deducted from day one. Due to this, my impulsive tendencies are reigned in: i use my account cautiously - people should only borrow what they can afford to repay, but I appreciate how easily people could fall into a debt trap with revolving credit.
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Well luckily you’ve got the adult decision of leaving it behind and not using it.
Given Monzo do credit checks etc, and we all know from this forum that many people don’t get through them checks, I see no issues. It’s not like it’s Klarna or clear pay or any other lender like those who will just allow anyone to split the payments up regardless of any checks taking place
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Maybe because monzo has lost its “more ethical” status?
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Starling doesn’t. No fees, no interest on an unarranged overdraft. And if you also have savings, nothing on the arranged portion either.
In respect of the 39% rate, I know it wasn’t a popular opinion, but I could totally see where Tom B was coming from with a daily charge. You always knew how much you’d be charged, and a monthly maximum. That, to me, was ethical. In forcing Monzo into a percentage rate, the FCA just blurred the simplicity, and now you have no idea what borrowing will actually cost in real money.
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I don’t think it has generally. But after taking a step back to reevaluate their approach to credit and after discussing it with a former Monzo employee with an insight for what’s going on behind the scenes, I do believe their approach to credit is among the less ethical ones.
Ah, the age old rebuttal of just don’t use it then. Easier said than done when you’re the person this approach has been designed to pray upon and exploit. Same argument I see in defence of gambling mechanics in video games. It works sure, but it shouldn’t have to be that way. It’s not inclusive, fair, nor friendly. And certainly not ethical.
Gamification isn’t a bad thing. It’s great for personal banking. But they’ve gamified Flex the wrong way around. Provoking use that would earn them money over keeping you out of debt and interest charges. And Monzo have a deeper insight than your standalone credit card does, which makes that feel like a real missed opportunity to do some real good in the evil world of credit.
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One might argue that it’s a flawed belief that one’s bank can both “keep you out of debt and interest charges” and provide you with credit whilst not going bust.
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Seems like they’re at odds with each other, but I don’t think they are. You’re still gonna get people who choose the 12 month plan because that’s what’s best for them, and make money that way. I don’t think they need to be persuading people to use it the way they do that would result in them making money from folks who get themselves stuck with it, not being able to afford the payments, and accruing both overdrafts interest charges and Flex ones as a result.
They can still make money whilst simultaneously encouraging and promoting healthier use.
I guess in some respect I just see what Apple Card is doing in the US, and get bogged down with just how dire the credit landscape is here. Not that most people see it, because they can’t look past the rewards and the fact we won’t get those, so to those it’d be a pointless addition when AMEX exists. But it goes way beyond that for me, in the way it promotes and encourages how you use it; gamification done right. It puts people before profit, and we saw that most evidently in that their response to covid was very unique, being the only credit provider in the world (to my knowledge; certainly none here did) to waive all interest on deferred payments. Not only did you not have to pay your bill, you also weren’t charged interest on it either. Our credit cards continued to add interest onto those unpaid bills at the standard rate.
So no, I don’t think it’s a flawed belief at all.
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