I was thinking, some people due to past bad money management are you unable to have an overdraft and this is down to the risk they pose in paying it back. However what if you created a self funded over draft feature that if you set aside a set amount this can be used in the same way an overdraft work’s, without any interest to pay on the money you borrowed as it would be yours to borrow in the first place. This could replenish each month in the same way an overdraft would. It would provide a good starting point for customers who want to show they can use an overdraft responsibly. And improve money management on accounts, ensuring that if the account ever went over drawn the customer wouldn’t incur any fees and would go into their self funded overdraft.
And if overdrafts are inherently available I see no reason why this feature can’t be incorporated
This is a really good idea to get people used to the idea!
I have set up something similar…
- I have added £50 to a pot named “Emergency fund” which I have vowed to myself I will not touch
- I then used IFTTT to create a home screen button which, when pressed, automatically transfers the £50 into my current account.
Previously I have found the need for an overdraft when out doing my food shop of buying fuel, and not realising there is not enough funds in my account to cover the bill. An overdraft would have been helpful in giving me the safety net, which the above method does also
Yep. An Emergency Fund would be a fantastic idea. I’d even go so far as to suggest that its an option when you apply for an overdraft, too.
Be nice for it to be an automatically locked pot which you can put in £50-£200, or have small amounts added automatically over time to reach a set amount. Then when you would normally go into overdraft it would automatically be taken from that pot first (with a notification).
What would be really amazing is if they could build a feature whereby you pay x amount into your account and then have a setting to offset that amount to use as an overdraft. X amount is put into a locked pot and main balance could now use that locked pot as an overdraft feature if necessary.
I’ve been thinking about something similar, like an overdraft pot. It would be self funded and the money would be spent automatically just like an ordinary overdraft when your balance reaches zero. Then when money is transferred into your account the overdraft pot would be replenished first before your account goes into the black.
In Valerio’s Q&A a few weeks back he said they were looking at a pot to offset overdraft in the future.
I like this idea. There have been times, usually close to pay day, where I’ve not realised how low I am on cash, but there is plenty in my savings pot. The ability to flick a switch on the pot that said “Use instead of overdraft” would be amazing, and then when the balance goes above zero again, it refilled the savings pot to it’s previous amount.
A nice red banner on my feed to let me know it happened would be good too, so I still get the guilt factor of going sudo-overdrawn.
I’ve been slowly building my coin jar and was thinking that ultimately this could build into a fund which could be used as an alternative to the formal overdraft.
Perhaps it could be setup so if someone setup an “overdraft pot”, then any funds put into it would be drawn down upon automatically when the account balance was below zero?
The unobtrusive and automated nature of this is the key here. I think it would be incredibly useful on a personal account level but even more so in the new joint accounts. My other half and I get paid at different time from one another and also from when the bills go out.
Logistically it’s it’s difficult to manage, so we have built up a float to cover everything. Would be nice to ringfence that float and keep it out of the JA particularly as we start using it for more everyday purchases.
Not sure it really needs to be a built in feature? Surely you could just use coinjar on a pot named “Overdraft” and that would be sufficient?
True. It could also be done with IFTTT if it was able to monitor and move money in and out of pots if the account balance was above or below a certain threshold. It would also need to be able to fill a pot to a certain predefined figure
At the moment witg a pot name overdraft I would have to manually move move out of it back into the main account before any bills/spending goes out. No different from an instant access savings account. Monzo can do so much more. Also from a joint account point of view, an automatic self funded overdraft/float pot could be preferable due to the financial implications of getting an real overdraft on a joint account, ie it goes of your file and another credit check etc.