Overdraft because of changing rates

(Dawid) #1

I wasn’t going to write anything about rates stabilising after day(s) but now time has come for me to mention it.

First of all the changing rate has annoyed me from the start, especially when I need to update my detailed spending system but I could live with that.

The problem I encountered was when I made few purchases and those changing rates have made me go into an overdraft. I don’t know whether people think it’s fair or not, but at the time of the last transaction I have 0.05 GBP, which makes me think - no need to top up yet it was okay, but then the rates change (always going higher) and boom I’m in overdraft.

I would like to ask the community what you think of it…

(Adam) #2

It’s your responsibility to keep an eye on it. It does say that the exchange rate is not final and will settle in a few days.

Monzo have already said they will not be charging overdraft fees for negative balances under £20, so that should be a fair buffer for small transactions.

(If there's the wrong end of a stick, you'll find me holding it.) #3

Fixed exchange rates would certainly be more convenient.

I’m not sure that a new small bank can have any influence though.

Or try to buy things when you know that the rates are going to go the other way.

:wink:

( related to Monzo CEO, Investor in Monzo ) #4

seems strange you are buying things that leave your balance at 5 pence, and feel comfortable that you can purchase your last item with that buffer - if it was me I would make sure I had at least a £10 buffer from my purchases to my balance :slight_smile: everybody is different I suppose , but then why expect an institution to pick up the bill for what you decide to spend with your tight balance - why cant it be up to you to restrict your last purchase knowing full well that it could put you overdrawn because the FX isn’t settled - different folks , different strokes I suppose :slight_smile:

(Geoff Pascoe) #5

I generally use Revolut when making a largeish non-GBP purchase because their rate is fixed at the time you make the purchase.

(Jolin) #6

It’s a shame the rate takes a few days to settle, but that’s due to the way the card networks work. I definitely wouldn’t want a fixed rate given the current system, as we’d just end up getting a worse exchange rate as Monzo would have to add a bit to hedge against rates changing before the transaction settles.

Anecdotally, I’ve not had the rates change between my purchase and settlement, but this will depend on when the purchase takes place and in what currency. I also wouldn’t run my bank account to within 5p if I could possibly help it. Would certainly stop any discretionary purchases before this point.

(Jamie 🏳️‍🌈) #7

Overdrafts are charged at 50p per day. So this cost you, what, 50p? A quid maximum? Or is it the concept of an overdraft that appalls you so?

(Rika Raybould) #8

Remember that the £20 fee-free buffer is designed for exactly this kind of situation. :slightly_smiling_face:

(system) closed #9

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