✅ Offer credit card 💳

[anon44204028]

Yep. Credit cards rely on people losing their jobs or having partners die and then they get clobbered when they no longer have the resources to pay their card bill

[anon19258969]

Unfortunately they seem to have thought of that:

For section 75 to apply, certain conditions must be met. Most credit card purchases will be covered, but:

• purchases are not covered if they are made by debit cards or by charge cards (where the monthly bill has to be settled in full).

You can only benefit from section 75 if you’re exploiting your client through debt.

[anon4468526]

Me too, I get 1% in one of my cards, and upto 1.25% on my other.

If Monzo would offer a flat 0.5% cash back on spending, I’d ditch my credit cards on stick with the Monzo current account. I would prefer to support Monzo than my credit card company, but the cash back is a nice touch.

Let’s see what Monzo come up with!!

[anon53645004]

This is my big dilemma.

I think the product is absolutely great right now. I’m sure there’s some improvements that can be made but a fair bit in the roadmap : social networking style changes, bill sharing, opening an account for your return to the uk(?) etc. couldn’t interest me less.

But…
My credit cards offer enhanced protection and (especially) cash back, it’s an incredibly hard sell.
As just mentioned, a flat rate (even like 0.5%) would likely have my dropping the extra plastic.
Not sure how feasible it is though. Ignoring potential efficiency and with my limited experience of running a bank, I thought current accounts tend to be loss leaders.

[anon4468526]

+1

Couldn’t have said better. Social media/Apple pay etc I don’t care for (but I understand others do), but the cash back on my credit cards can be about £150 a year. So it’s not to be sniffed at.

I really hope that it’s looked at, if Monzo can make money with this as well, then it truly will be a superb offering.

[anon44204028]

If everyone wants cashback on their debit card we should charge a monthly fee for the account.

But if most people prefer a fee free account then there can’t be cashback. That is a fair trade off

[anon53645004]

Maybe it’s a fair trade but I’m just looking at it from my own naive and selfish POV.
My credit card doesn’t charge me any money and likely does all kinds of evil things to other people.
I want to be all happy and fluffy and daisies but I also (understanding the concept and risks) want “free” money.

I think that if there was a fee, you’d have all financially savvy customers doing the maths (so apart from the nice features, it better be a damn good offer) while everyone else avoids, thinking “who pays for a bank?”

I don’t have any answers and I’m not sure how small a minority we are but if new banks like this are revolutionary, I feel like I shouldn’t be missing out on something that I think matters the most.
Maybe theres simply no possibility without a cc offering and every usage scenario cant be covered.

[anon4468526]

I understand it’s a real trade off, so will be interesting to see what happens. There was talk on another post that Monzo were looking at loyalty perks of some description, similar to Curve. So maybe something is bubbling in the background, as Monzo were looking to hire a Head of Partnerships for this purpose.

[anon13662639]

@rarther

t’s not free though. They are passing the costs on to the retailer who passes it on to you (s75 only applies above £100 and most big ticket items the retailer charges you an extra fee to use a cc instead of debit card) and they jack up interest rates to cover costs as well. I’ll never understand the people who say well ipay it off at the end of the month so it’s free. At some time in your credit life you are going to get screwed like everyone else

I have had credit cards for a couple of decades and never got screwed as you say…

Set up direct debit to an account with money in it, and dont load plastic with more than you can buy… Simple really.

[anon13662639]

@nottrobin

I don’t entirely understand the profit model that funds these credit card offerings, but I assume it’s probably paid for by exploiting the poor and financially clumsy. The credit cards offer attractive deals in the hope that people will mess up their accounting and end up paying the exorbitantly high interest rates associated with standard borrowing. This means that people like me getting 1% cashback, or people benefiting from free borrowing are actually doing so on the backs of the poor.

While that may be part of it, merchants pay a higher fee to accept credit cards… Effectively its a merchant funded discount thats paying for your perks.

[anon13662639]

@anon44204028

Yep. Credit cards rely on people losing their jobs or having partners die and then they get clobbered when they no longer have the resources to pay their card bill

I disagree with this totally… Its simple, if your partner dies, or you loose your job, dont spend money you dont have.

Its not the card issuers fault if you attempt to live beyond your means, if your means changes, change your spending. Credit isnt forced on you, its offered.

[anon13662639]

@Citibadger

Couldn’t have said better. Social media/Apple pay etc I don’t care for (but I understand others do), but the cash back on my credit cards can be about £150 a year. So it’s not to be sniffed at.

Due to me having to do long haul travel… And my wife doing the same some trips… For me its potentially a lot more than that if I am careful with companion flights to take advantage of pairing with a single a biz class booking.

I really like the Monzo app and systems… But the cold hard truth is I can get an awful lot with clever card spending.

[NamesKieran (Kieran McCann)]

@PhatPheddy

I disagree with this totally… Its simple, if your partner dies, or you loose your job, dont spend money you dont have.

Its not the card issuers fault if you attempt to live beyond your means, if your means changes, change your spending. Credit isnt forced on you, its offered.

Whilst I agree you shouldn’t really be spending money you don’t have, credits cards are absolutely forced upon you.

As soon as I turned 16 the first piece of mail I received through the door was a barclaycards credit card offer, and I still receive them to this day maybe 4 time a year or more. Credit card companies should never be allowed to post offers like this to you or at least not to younger people.

[anon13662639]

@NamesKieran

Whilst I agree you shouldn’t really be spending money you don’t have, credits cards are absolutely forced upon you.

That word… You keep using it… I do not think it means what you think it means…

/princessbride

[anon41449484]

As a marketplace, credit - short/long/fixed/revolving - is fundamental to the economy in principle.

Hence I don’t disagree with credit cards per se, but there seem to be lot of inefficiencies, arbitrary conventions and tricks played by the industry to extract profit. It’s the way credit cards have been implemented that people have a problem with, rather than the concept of unsecured credit imo.

The ‘problems’ @anon91821566 alluded to that I think need solving are around transparency and automation. I believe the solution would be a p2p marketplace (like zopa but for credit card lending). The marketplace vehicle would take responsibility for pooling and managing investment funds, credit scoring and issuing credit lines automatically. The credit lines could have corresponding ‘smart contracts’ that algorithmically monitor repayments, send alerts etc, thereby eliminating the intermediaries and (hopefully) reducing the cost of borrowing.

Players such as Monzo would allow users to access this credit (investing or lending) via api.

[anon91821566]

@KrisMilne

As a marketplace, credit - short/long/fixed/revolving - is fundamental to the economy in principle.

Hence I don’t disagree with credit cards per se, but there seem to be lot of inefficiencies, arbitrary conventions and tricks played by the industry to extract profit. It’s the way credit cards have been implemented that people have a problem with, rather than the concept of unsecured credit imo.

The ‘problems’ @anon91821566 alluded to that I think need solving are around transparency and automation. I believe the solution would be a p2p marketplace (like zopa but for credit card lending). The marketplace vehicle would take responsibility for pooling and managing investment funds, credit scoring and issuing credit lines automatically. The credit lines could have corresponding ‘smart contracts’ that algorithmically monitor repayments, send alerts etc, thereby eliminating the intermediaries and (hopefully) reducing the cost of borrowing.

Players such as Monzo would allow users to access this credit (investing or lending) via api.

I 100% agree with this. That’s the future we want to get to.

[anon4468526]

But if I wanted to pay cash, the retailer looks at you like you’re from out of space, cash costs to process anyway. So either way you pay the same price, if I get cash back out of it for paying the same price, so be it. If I got it cheaper by paying with cash or debit card then I’d do that.

It’s a whole industry matter, airlines do it, holiday companies also. Why don’t normal retailers charge 2 prices, one (more expensive) for credit cards and another (cheaper) price for debit cards??

[anon13662639]

@anon44204028

You can’t help it if you lose a job or a partner dies but you still get screwed for interest and charges now you are no longer able to pay installments due to loss of income. It is not a case of spending money you don’t have after your change of circumstances but no longer able to service a debt you previous could when in work. It is not a matter of living beyond your new means but a case of while you were previously living in a manner appropriate to your then financial circumstances no longer being able to. I have not said anything about anyone intentionally living beyond their means but once their circumstances change the once previously affordable interest and charges hits hard.

This is a function of debt itself, not credit cards… Credit cards are merely a tool which gives you the option of taking debt.

As said I have had credit cards for probably 2 decades, not once have I used them to incur debt. I use them as for the perks, and dont use them for the aspects which have cost or risk.

Just because something ‘can’ offer you credit doesnt mean your forced to use that credit. Simply dont take it and enjoy the perks.

[anon13662639]

@Citibadger

It’s a whole industry matter, airlines do it, holiday companies also. Why don’t normal retailers charge 2 prices, one (more expensive) for credit cards and another (cheaper) price for debit cards??

Actually here in asia because its a cash society and they dont want the ‘cost’ of card processing seeing a +3% for card charges is very common. I believe this is against visas terms of service to be a merchant in the west but dont know here.

[tommy5dollar (Tommy Long)]

Obviously there are circumstances where it’s desirable to use credit, either in order to game it for the various protections or bonuses using it offers or because of an abrupt change in circumstances where a short-to-medium-term use will the worse alternatives.

It is worth noting that whilst people often don’t feel like they have many realistic choices in some situations, no one is FORCED to take or use credit. We live in a country where lenders are very sympathetic to sudden changes in circumstance, where we have a welfare state and benefit system that covers many scenarios, where impartial financial/debt advice is free and common-place and where bankruptcy always exists as a viable (and sometimes advisable) option.

That’s not to say that using credit is simple though. As someone who is highly numerate and runs my own business, I steer clear of credit cards these days (I only started using them to “boost my credit rating” before applying for a mortgage) because I found they added an unwelcome level of opacity to understanding my current finances. For those who don’t have decent levels of numeracy or a firm grasp on their finances (or are prone to temptation), credit cards are often a confusing trap.