Loans


(Jordan) #102

Whatever anybody thinks about the overdraft fees (will need to be changed due to FCA), the foreign ATM withdrawals, depositing cash and even (do I dare to mention) Monzo Plus

What we don’t like is the idea that people “float” or “bloat” their savings by taking out in my view predatory loans akin to Wonga. These are pots for savings and shouldn’t be preyed on “just to tick it off” as @nickh has said.

The loans themselves are fine and work within the realms of traditional banking - its the way they’re being marketed which I find predatory.

We don’t know the numbers granted, but I don’t think that is a defence in this instance.


(Alan) #103

I thought they were just passing on the cost, so if that’s really the case you haven’t helped monzo in reality, you’ve just helped starling as they would have subsidised your withdrawal had you used their card.:man_shrugging:


( related to Monzo CEO, Investor in Monzo ) #104

I seem to remember that around 2% is passing on the cost :slight_smile: if I remember correctly

edit then - 50p to Monzo + £1 to the cost :slight_smile: no cost to Starling :slight_smile:


(Splodf) #105

Whilst I was being slightly tongue in cheek, the silence is deafening from Monzo.

It’s an indefensible idea in my opinion and I think they owe the community, many of whom have backed Monzo with their own money, an explanation as to why this idea ever saw the light of day.


(Tom) #106

Yup, this is it.


(Peter Shillito) #107

Okay, so, I have some thoughts. First, what are the reasons people set up pots?

  1. Budgets for certain types of spending
  2. General savings
  3. Saving up for something specific

If you’re saving up for something specific, that’s when you’d use the goals feature of pots. This is not suggesting “loan to save”. Suggesting people take on credit at a rate higher than the amount they get back by putting it into savings (zero) is ridiculous and not what’s happening here.

That isn’t to say the placement of the advert is not problematic. Baiting people into getting easy and quick credit to reach a goal quicker doesn’t feel right. If anything, it feels close to a free-to-play game’s micro transaction to bypass that frustrating wait to get your energy meter up again. Bit more expensive though :rofl:

For comparison, my old bank (NatWest) used to phone me on occasion to say I could get a loan, but it’s just shit cold calling based on personal information. With Monzo, this is directly targeted based on how people are using their app, and that’s not cool.


#108

I think this sort of thing only makes sense if the ability to include a target date for a pot goal is built.

In that scenario, people might take up the offer of a loan to pay for a holiday they need to pay for on the pot goal target date or new phone released on the pot goal target date.

A pot goal target date would also make it easier for Monzo to identify people who might want one of these loans (eg: people with a pot called “Holiday” or “Skiing” or “new phone” who don’t look like they’re going to reach their goal before their target date after scheduled transfers into the pot are taken into account) and so reduce the chances of Monzo accidentally annoying people who are on track to meet their goal targets.

About general loan promotions

If people don’t like this sort of thing, can’t they just turn off lending promotions in the app Settings?


(Alex Sherwood) #109

As far as I can tell, Monzo are simply using Pot Goals as a way to identify intent. You’re saving up for something & they’re giving you a way to get it sooner.

Obviously they’re not suggesting you use a loan for savings, that would be stupid. They could make that clearer. But it would be nice if for once, this issue wasn’t blown out of proportion.


(Tony, Secret Lemonade Drinker) #110

This post was flagged by the community and is temporarily hidden.


#111

As stupid as taking out a loan just so you can achieve your “goal” quicker?

Like I said, I’m happy to hear from Monzo about what they intended this to be, but unless your goal is something life threatening or something you genuinely need (and not a holiday fund or something else), I don’t see how this can be portrayed as a good idea…


(Jordan) #112

But this isn’t how a 20% loan should be marketed. IMO a loan carrying that much APR should be used for really crucial funds being accessible very quickly, but that you know you’ll be able to pay back within a few weeks.

If someone is “saving up” that suggests they have a time period and goal in mind and therefore Monzo going “oh oh oh - how about you get that money now” when they may be putting money away £20 a month doesn’t make sense.

The loan itself isn’t the issue, its the way its being marketed which is unhealthy.


(Alex Sherwood) #113

If you wouldn’t want to use a loan at that rate like that then great but other people might want to keep the loan for longer.


(Splodf) #114

I get your point, but on this occasion it’s being advertised on a pot called ‘Holiday’.

Regardless of financial situation, no lender should be offering a 20%+ APR loan for someone to go on holiday.

Just my opinion of course, but that doesn’t feel like responsible lending.


(Jordan) #115

So the point still remains, if you’re saving for a goal, why would accessing a loan like that help?

Have the loans accessible in their own section - I think marketing them through pots is a bad choice.


(Alex Sherwood) #116

You’re still ignoring the intent - if the person’s saving up in order to buy something then it’s the right place to have it in my opinion.


(Splodf) #117

I’m not sure if its me or you?


(Jordan) #118

I feel like acquiring a 20% loan and saving £x for a holiday/ car insurance/ or the like are drastically different intentions.

The typical loans are for things like buying a car, a house etc things that its better value to obtain the money now and then make the payments over the following years.

Obtaining a cash grab just to move your goals forward isn’t the same as managing your savings for something you want.


(Jamie 🏳️‍🌈) #119

Nice to see some balanced debate coming through on this.

I agree, it seems like a bad place to align borrowing alongside savings goals. I have no feelings about Monzo advertising its lending, but IMO borrowing should be something actively sought out by a customer, because you usually do that when you want to spend the borrowed money on something.

(I think that borrowing money for things like a holiday is a stupid idea – ie. it’s cheaper to allocate money to a thing every month beforehand than it is to allocate it afterwards and holidays aren’t exactly essential – but if people want to pay more for something because they’re impatient, who am I to bother about it?)

The wording of this seems to suggest you place your loan into a Pot, which would be terrible financial management, and unethical of a bank to encourage.

So I think the ad is awkwardly located, targeted and worded.

It joins a list of quite obviously profitability–driven decisions which, combined, makes me feel Monzo is beginning to just blend in with other banking services and not provide much of a radical alternative.


#120

This goes back to the Starling argument of whether having savings and borrowing in the same part of the app is responsible (general consensus was that it isn’t, but people are free to make up their own mind).

The fact you are in your banking app in the first place is enough for me (where they advertise loans on the main page is fine) - The feels more irresponsible, but again, it’s just my personal opinion.


(Adam) #121

I’m not actually being offered loans in the app (not that I need one). I’ve an overdraft of £1000 that was offered that I took them up on as a safety-net that I never use.

Is this still on a trial?