In case anyone’s wondering, I’m guessing that Jonas is referring to this post -
but personally, I don’t think it’s a good idea to rely on other user’s memory of the model’s that’ve been discussed & it’s worth bearing in mind that the model keeps changing.
So it’ll be helpful to have a confirmation from the team of what’s been decided - for now..
I won’t be bothering with an overdraft at 50p a day. My current bank, Nationwide, charges the same and it’s one of the reasons I despise it. It penalises those with a small overdraft as cost is the same if its £100 or £1000
To put the 50p a day figure in context, if you borrow more than £350 with Monzo you’re getting a better rate than Lloyds (who are about to start charging 1p for every £7 you borrow) are now offering..
So it might sound like a variable rate is better but in the end, if you’re one of the 7/10 people who has an overdraft of £700 on average you’re a lot better off using Monzo’s.
Whether that encourages the ‘wrong’ behavior is up for debate of course the major benefit that I can see with this approach is that users who go into their overdraft on day x of the month know exactly how much they’ll pay at the end of the month, rather than having to predict how much they’ll ultimately end up spending & therefore borrowing, in that month.
In other words, it removes uncertainty & therefore, anxiety which is one main benefits of Monzo already..
I gather that Monzo are going to be more inclined to try and help people manage their money than ream people further in debt for more money than they have — the only reason a lot of people stay in perpetual debt is because bank fees are pretty crippling (for example, I’m paying an average of £50 a month for my Lloyds overdraft due to extra fees, and I’m gonna switch my Lloyds account to the equivalent of a debt account, pay it off, and close it when I switch to Monzo fully).
Also: £20 buffer sounds amazing considering offline payments and TfL are both jerks
This can help people actively climb out of debt, but can also get them further into it. I expect @StuartM will likely be involved in helping the people with financial difficulties part
Yes I will be! Also i’m completely against any excess/over limit fees and I agree that it is a big reason why people stay in debt or struggle to get back on top of things. I’m glad we aren’t charging them
I guess over a certain amount the fixed amount per day is preferable. I only have a small overdraft with Starling - £250. The £1 or so amount they change vs £15 seems a lot more reasonable. They charge 15% interest.
Maybe a compromise would be charge interest but capped at £15 a month?
I rarely use my overdraft but I think Monzo is on the right track here but perhaps raise the buffer? With First Direct you get the first £250 interest free.
The concept of ‘testing’ an overdraft is interesting. I don’t use one (but do have one) so to test one would be a deliberate choice not to allow extra money into the account I guess. That could be interesting academically but what would it do for a credit rating?
I’m not clear what the goals of the test would be either. I hope that will all be spelled out when the public test is activated.
I’m not sure what difference this would make for income generation for but I would like to see something like:
£0 fee for up to £50
£0.25 for £50.01 to £200
£0.50 for £200.01+
Also would like the fee to only be applicable based on the position of your account at midnight.
What would help me the most though to manage an overdraft position is the instant notification that I am in an overdrawn position so I can rectify the situation. This for me is what gives the edge in general.
I have received overdraft fees in the past not because I did not have the funds but because the funds were not in the right account at the right time.
I too have a current interest free overdraft of £250 with Barclays that I from time-to-time dip into for 4/5 days at the end of each month; if Monzo could offer the same I would definitely switch my banking life to Monzo.