Monzo Flex & base rate

Hello - I was looking at Monzo Flex and it says the rate/ APR is variable… Is this because the rate/ APR changes in line with Bank of England base rate?

It’s because it varies depending on your personal circumstances I believe - the interest rate is fixed based on what you’re offered. Monzo will have to give you notice to change it - as per their T&Cs

The credit agreement doesn’t specify, what, if anything, may cause the rate to go up or down. Nor do Monzo offer any sort of statement or bill which clarifies this like traditional credit cards.

The whole operation is more akin the unregulated approach of Klarna than it is to a regulated credit card.

Not true. The rate is flat. Everyone gets the same. Again, very different approach to the traditional credit card.

As I understand it, Monzo designed Flex specifically to be a regulated product. I’m not sure that having a fixed APR means it’s therefore unregulated?

More broadly, I thought that the terms were clear. The APR is fixed and specified in the credit agreement. It even says this:

We’ll give you at least two months’ advance notice and tell you our reasons for all other changes (including interest rate changes) in a secure way, using one of our usual channels (see ‘How we’ll contact you’ in our Terms and Conditions). If we’re decreasing your credit limit we’ll usually give you 14 days’ notice unless we think that it wouldn’t be appropriate.

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Honestly, I’m not sure if it is regulated or not but didn’t want to say one way or the other, hence only used to describe the product it’s similar to.

I’m sure it’s been answered in the Flex thread somewhere, but it’s very long!

I mean it’s not! By it’s own definition. You can’t change a fixed rate during its fixed period, though I suppose you could stretch the narrative to say it’s a rolling fixed rate for two months, but that would be disingenuous in my view. It’s a variable rate and there’s nothing wrong with that!

The terms are clear yes, but lacking in specifics which is what the person asking the question here is looking for, and the terms don’t answer it!

I think they do. The rate is fixed at the specified percentage rate unless they give you two months notice of a change. There is no contractual link between the base rate and the Flex rate so any changes are at Monzo’s discretion.

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Sure! But does the base rate have any bearing on their decision making behind it? Who knows other than Monzo.

It draws back to my comparison though. None of the BNPL platforms are clear on how their rates are calculated. It’s all just a rate they can change at their discretion with little transparency. Meanwhile every credit card I’ve ever used has been quite clear on this, that how they present the calculation on bills seems to me like an industry standard (bit like the £12 late fees), and I’ve always assumed is something they’re required to do by the regulator.

  1. Flex is very much a regulated product.
  2. All (variable) means is that the lender can change your interest rate at a later date - although as mentioned above, this would require a 2 month notice period.

The base rate going up might trigger a lender to want to change existing customers interest rates but it’s highly unlikely given the small increases we’re seeing today. Maybe if the base rate went up a lot to 3% or something like that it might play a bigger factor.

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