I have always disliked being overdrawn on my main current account - sometimes this happens by accident and then (some) banks give you a window of opportunity to rectify this … but there is always a possibility you miss the chance and incur penalties.
When you offer current accounts, how about offering two additional ‘linked’ accounts to work like this:
-
Current Account
The Debit Card and Standing Orders, Direct Debits, etc. operate this. -
Savings Account
This is set up with an Initial Credit (say £100) and added to whenever you choose to (with the option that you can set up a ‘sweep’ to move funds in excess of £XXX from your current account whenever it reaches that level).
This Savings Account could also be set up to allow funds to automatically be transferred to the Current Account to stop an Overdrawn Balance. A text message would advise you when this happens. In effect, you are ‘borrowing’ from yourself but receiving interest at (say) 2% for any balance in this account.
- Continuous Credit Account
In addition to the above - or set up as the automatic default instead of the above - an account that provides a line of credit (obviously this would have to be agreed before set up) of 20 times an agreed monthly payment i.e. £50 per month provides £1,000 - the cost being double whatever the Savings Rate is (say 4% - or whatever margin Mondo sees fit - but both rates should, ideally, be very attractive!
The monthly payments only kick in 1 month after the facility is accessed (a text message flags this up at the time and a week before the first payment) and interest is only charged on the outstanding balance (from Day 1).
This Account would provide Continuous Credit so repayments allow further borrowing up to the agreed limit (i.e. 20 times the agreed monthly payment).
Alan