Our overdrafts are changing

[Jackcrwhitney (Jack)]

If credit scores/reports are reviewed by monzo every month how much notice will monzo provide should someones APR % need to change?

[TheMullinator (Dandy Borehole)]

@nickh

From my POV, as long as things are clear, and people are being treated equally, I’m not too bothered if the rates are more than other banks (people have options, Monzo won’t be the best at everything).

Obviously it should be simple. That’s where the 50p charge was best I feel. Clearly, as someone who makes heavy use of the overdraft facility you speak with knowledge of the subject. I don’t myself, but I can empathise with someone in your position

[nickh]

People are talking about the acceptance criteria, not the percentage… So I’m not really sure where you are going with that

[TheMullinator (Dandy Borehole)]

Simplicity.

[nickh]

Yes, and the acceptance criteria was equally as confusing beforehand… so…

The percentage vs 50p shouldn’t really make things harder to understand for people, as it’s laid out in the app.

Anyway, lucky you don’t need to worry about it, and thank you for your sympathies

[TheMullinator (Dandy Borehole)]

Empathy. Not sympathy!

I don’t think the eligibility criteria are any more cryptic than legacy banks like starling

[Jackcrwhitney (Jack)]

Don’t they have to be cryptic to a degree. Stops people gaming the system.

[nickh]

Ah, quick typo change I see

Glad to see that doing things like the legacy banks is what you are here for

Have a wonderful evening Arnold

[TheMullinator (Dandy Borehole)]

Typo change? I haven’t made any changes. What are you on about?

I’m also not here for legacy bank stylings. I was using it as a comparison. I don’t appreciate your way of talking down to people. It’s rude and uncalled for.

[BritishLibrary]

What I find most crazy is back when I was a fresh out of uni grad, with literally no credit rating at all, I was able to get a £2k overdraft, for about 4 years, at 18%.

I do find the rates crazy, and the justification that “it’s inline with the market” just not very Monzo.

I get the whole “making money work for everyone” bit, not sure I think this does it, but 40% AER feels shady.

Interestingly, having just looked at the loans section. I could get a 12 month loan of £3k for a better rate than the loans (12.9%).

Maybe if they announced that total account and regular pot balance would count…

Hmmm… is my thought for now.

[Addzy]

There was a previous post somewhere before where a dev spoke briefly about how loans were calculated, they use a mix of both your credit report and analysis of how you use your account. I.e if you have a 999 Experian score but don’t use Monzo as your main account you’ll probably not get offered one as they don’t have the data they need for their checks to pass you.

I’ll try and find the post next time on my computer.

[nickh]

That makes sense, and I seem to remember something about how that affected people who predominantly used their joint accounts rather than their sole account

[TTJJ]

Monzo already had a very expensive overdraft which was masqueraded as clear and simple to understand. I think anyone in their right mind would choose paying £1-5ish that they didn’t fully understand the structure instead of £15.50 in charges they fully understood.

I believe most people are going to fit nicely into the 39 and 29, as otherwise Monzo would be generating less money from overdrafts. 19 will likely be reserved to ultra-low risk customers.

It’s still better than HSBC as I’ve been emailed that my rate is going up to 39.9 from 11.9% with a £20 maximum monthly charge though the first £500 is fee-free so likely no charges for me.

[duncang (Duncan)]

@nickh

I’ve never really understood why the people who are likely to need their overdraft the most, are the ones who get stung with the highest fees

Seems cruel and unusual, especially because the overdraft is often being used for life essentials .

[TTJJ]

But then again if anyone feels it’s cruel and unusual there’s Starling who offer significantly better rates now and previously with basically on-par features otherwise. If anyone chooses Monzo’s rate I don’t think Monzo can be called cruel because you’re choosing the more expensive product.

[Paulw (Paul)]

So the most vulnerable/lowest earners get charged the most. Feels very unMonzo. More like Boris at the helm

[anon70107404]

@Addzy

…a dev spoke briefly about how loans were calculated, they use a mix of both your credit report and analysis of how you use your account. I.e if you have a 999 Experian score but don’t use Monzo as your main account you’ll probably not get offered one

Ah, that makes some sense! Thanks

[projectfortytwo (Chris)]

Homeowner with mortgage, good income, use Monzo as my main account, offered an overdraft but unable to get a loan with Monzo. Self employed? Business account also with Monzo with a steadily increasing balance. Lending criteria for any financial institution are usually a closely guarded secret and vary widely.

Edit - Transunion score varies but usually around 670-680, Experian score 999 and has been for years.

[TheMullinator (Dandy Borehole)]

A bad credit score doesn’t mean you’re a low earner. It’s disingenuous to suggest that’s the case.

You could be on £100,000 and have a bad credit score.
You could be on £12,000 and have a great credit score.

Your credit score is more than salary.

[AR2018]

So when in December will users start to be given the option to move onto these APRs? Also will this be a limited offering of this option on a controlled rolled out basis?