Received an email yesterday regarding monzo updating my terms for my overdraft saying in the future if I want too I can ask about separating my overdraft from my current account to help me pay it off, I thought this was a good idea until I read further down saying they can also just do this if they think it will help but if they decide to do it you can no longer use your overdraft and it will become unavailable to you, this seems to me like it’s a sneaky tactic for them to get you to pay it back and take it away completely, I use my overdraft how it’s intended to be used and it doesn’t cause me any financial stress, anyone else had one of these emails?.
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I mean a bank can withdraw an overdraft anytime it likes anyway, so when you look at it in that context it’s a small thing. To be honest if a customer is struggling that much to reduce their overdraft then maybe they shouldn’t have one.
An overdraft is only meant to be used as an extremely short term loan in any case.
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Monzo need to be a responsible lender. If you’re living in your overdraft then they need to try and help.
There’s nothing “sneaky” about it.
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I mean they come across like there trying to help but it seems all there trying to do is clear the balance for there own good and take away your overdraft, monzo isn’t my main bank and I use the overdraft responsibly so I see this email as a bit of a kick in the you know what, hopefully they will never act on it but let’s see I guess, I use a overdraft how its suppose to be used so I don’t see why this email has arrived in my email, strange.
Monzo want you in your overdraft, that’s how they make money. But they have to be responsible too. They don’t care about the money back, if they did, they’d cancel everyone’s
Monzo have the data on how much goes through that account, how much of the overdraft you use and how much that costs you. That calculation means you’ve got an email.
I’m not sure how being overdrawn on an account you don’t use is using it sensibly though.
Will just see how it goes I guess they say it’s only an option to you if you want to use it but they can also step in and make the changes, will see what happens.
Some people are continually in their overdraft, and never know how to get out of it month to month.
Removing the overdraft which is one of the most expensive forms of lending, helps customers get back to using their own money month to month, improves their mental health, and allows them to treat the overdraft debt as a bill and actually pay it off.
Removing access is the right thing to do. Credit cards allow you to do this if your interest rate is increased. You can maintain your current rate, but they close the card and then the balance is paid off it’s over and done with.
Sounds a great idea for most who live month to month in it. I’d be curious to know what it looks like from a credit file view, is it an arrangement or a loan style replacement?
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Likely an arrangement to pay. So not the worst but also not a good thing on your credit report.
The cruel irony is that often this means someone in debt spirals and has a terrible credit report, only affording terrible interest rates and just spirals out of control.
I understand why it’s a negative on your credit file, but it would be different if it showed effectively as a loan or credit line from Monzo that you pay off monthly (and thus keeping up with would be a positive).
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The email sounds like they remove it and place it elsewhere so either an arrangement to pay which would be normal, or transferred into a loan without detrimental impact, on more favourable terms.
I realise this is covering old ground and it’ll never change, but for this exact reason, pots should go against your overdraft.
“I’m in my overdraft but I want to save £10 a month towards paying it off in this pot”
Easy to do. Easy to see. But instead it has to be in your main account, showing you that you have that money ‘available’
Monzo could make this part of money management so much better.
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The email was sent to everyone as it was a change to your account T&Cs which apply to all accounts. I got it and rarely use my overdraft.
I haven’t had it yet but it only ever dips in if something comes out.
Maybe they are sending it out in stages.
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