Oh sorry, I thought you meant closing the accounts of those in the debt trap, rather than well-to-do, never pay interest folk.
Iām guessing but I think that 95%+ of users wouldnāt pay any fees (or just pay marginal ones). I suspect the answer is a few-fold: they only need one or two percent of users to forget to sort things out after, for example, the end of a 0% deal to turn a healthy profit (so itās a numbers game), they want credit cards to be seen as an affluent thing, rather than a device for the poor (which would probably then attract additional regulation), and (more fundamentally) when someone opens a credit card account, all the credit scoring in the world canāt tell you if theyāll ultimately default (commercially bad), be in the debt trap (commercially good), or pay no fees or interest (commercially bad).
Iām not saying weāre completely innocent of this dynamic either but itās also not a binary 1/ 0. Thereās a sliding scale.
A few reasons are:
They use sneaky fees to catch people out - eg. missed payment fees, FX fees, ATM fees, losing your balance transfer promo if you miss a payment, etc.
They hope that you eventually pay some interest.
There are ecosystem benefits (this is an important one for us) - eg. If you get and use Flex, even if only the interest free options, then youāre more likely to move more of your financial life to Monzo, get plus/ premium, etc.
Itād just be really odd to not accept these customers.
They float around Ā£0 profitability - so not massively negative, just not highly positive.
Itās much much less than this.
This is really interesting - and also helps answer the above question
For what itās worth, Iām the same as you - I donāt use a credit card - I donāt care about the Ā£100 - Ā£200 cashback I might get per year.
Most people I know only use credit cards for a large purchase they want to split over a few months, thus paying interest. I suspect the number who use them for day to day spending is relatively small.
Why keep accounts that never pay interest. Mostly it is a risk management excercise. Depending on different profile of customers, different set of customers will get into debt trap at different times. To ensure one always has some interest paying customers, one wants to have a diverse set, when things improve for some versus others.
Plus credit cards do have slightly higher interchange fee, thus for example Monzo makes slightly more money of people using their flex card versus the debit card.
If people use the virtual card yes, but I would be curious to know how many flex a transaction from their debit card rather than using the virtual card number.
In an ideal world, someone like Monzo (or Starling) could acquire Tymit.
Tymit is a pretty good product, just (in my opinion) quite poorly executed.
Iām sure either Monzo or Starling could make a better job of it.
Yes, 3 months interest free credit, or 6/12/24/36 months at fixed interest.
The difference between Tymit and a standard credit card is there is no minimum payment, you have to decide the terms on every purchase you make.
A Monzo CC would be amazing. I wanna spend on my everyday essentials through a credit card since itās just nice for building a report, and I donāt want to buy everything on BNPL
Thats now possible, when you make a purchase you can just tell it to collect the full payment at the specific date rather than over 3/6/12 months. Also a physical card is in testing right now.
but itās also not a binary 1/ 0. Thereās a sliding scale.
tymit