Should Pots balances be counted for overdraft fee calculations?


(Alex Sherwood) #1

This discussion was started with the below post from Mirow :point_down: Monzo’s CEO Tom’s response is the solution you see in this post.


Monzo 101: How do I add money to my Monzo account?
Inconsistent wording
#2

I don’t mind too much if it is 50p a day or 15% pa, for me the issue is Pots.

With Starling if you have say £100 overdraft but £100 in Goals they do not charge

With Monzo if you have say £100 overdraft but £100 in Pots you do charge

As long as pots are not separate accounts with their own number they are part of the account and hence should be taken into account when calculating charges


Starling Feedback
(Marcel Ruhf) #3

I couldn’t agree more - it’s one thing I really don’t get. If pots were separate savings accounts, OK. But in their current form, including funds in pots when calculating whether a user is overdrawn is a no-brainer, at least that’s how I view it.


(Jack) #4

I prefer pots not to be included, I’ve separated that money for a reason. When other providers in the marketplace tie into pots for savings etc (which may technically be a separate account with that other provider) users will get confused as to why money would be leaving one pot and not others to cover the negative balance. This would provide an inconsistent approach.

Am I understanding what you’re talking about correctly?


(Peter G) #5

This is exactly it, I think.

If Pots were only ever intended to be a separated part of your main balance then Starling’s approach seems to me to be preferable.

But, as you say, @Jackcrwhitney, Monzo’s decision makes much more sense when you look at Pots as the way into integrating with third parties.

In the short-term it might seem a bit suboptimal, but hopefully it’ll become clearer when the marketplace becomes a thing. (Savings Pot coming :soon: soon!)


(Lawrence Ferguson) #6

What money is leaving a pot / goal ? That makes no sense.

It’s pretty simple, if you have money in a goal it negates the overdraft fees. It doesn’t take money?

Jumping through hoops to justify unjust charges there me thinks.


(Jack) #7

If your balance is £0 and you have money in a goal it has to take money out of that goal to pay for your purchase thus reducing any money you’ve put aside. Rather than enter an overdraft?


(Kevyn) #8

The key I think is if the pots are classed as separate accounts. I feel they are and thus interest charges should be on people in negative in the main account.

However other users here talk about the main account and pots being the same account, using metaphors such as envelopes in envelopes etc. If it is genuinely one account then, just like Starling, fees shouldn’t apply if the overall account has a positive balance.


(Marcel Ruhf) #9

Yep that’s it. As with Starling, pots are a segregated area of the main account. So if you don’t have an overdraft and all your money is in pots, they will fail, the same goes for Starling’s goals. The only difference with Starling is that they consider the amount kept in goals when calculating overdraft fees.


(Jack) #10

Ahh I see, so essentially you’re getting some of your overdraft free and that amount varies as to how much based on your goals as a total?
Personally I find that a little confusing especially if you want to work out your fees for the month.
I can see how it has its benefits though.

As my previous post and @Peter_G ‘s post I think Monzo’s implementation will be clearer once third party’s integrate with pots and the marketplace. As calculating how much you can go over without paying a fee would then be confusing for the end user.


(Marcel Ruhf) #11

It can be confusing when you have an EAR/interest-paying overdraft, bit in Monzo’s case of adding main balance + pots balance (as seen on the Account screen) to see whether you would be charged (anything above -£20 is subject to a fee, that’s as simple as IMHO).


#12

Surely at this point they are no longer pots but an integration to show the balance as the money will be elsewhere, with the 3rd party?


#13

maybe some pots will still be with Monzo but some others with third parties. in which case the logic is the ones with third parties are not taken into account when calculating overdrafts but the Monzo pots as part of the current account should be.


(Change Works) #14

Additionally, the account balance includes money in pots, and so I shouldn’t be paying overdraft fees if my account balance is positive.


#15

Agreed


#16

You wouldn’t have to pay overdraft fees if you simply drew down the money in the pot.

Monzo provide 4 clear options:

  1. Top up more money
  2. Withdraw money from pots
  3. Bounce payments
  4. Utilise the overdraft facility

Personally, I wouldn’t want Monzo to automatically spend money from my pots when by balance gets low. I prefer to have control over which option I go with, which is usually to add more money in my case where I’ve overshot my monthly :dart:


(Peter Roberts) #17

Assuming you can transfer money into pots and put you into overdraft doing so then there’s no effective difference. Not sure if you can though


#18

The effective difference is by doing so you’re borrowing money from Monzo. This incurs a transparent fee. Personally, I do not advise borrowing money to increase a balance in a non-interest bearing pot.


(Peter Roberts) #19

That’s fair, I meant no difference in overall funds available


(Marcel Ruhf) #20

Not really, since pots are part of the same account. That’s according members of the team, with the reasoning being that it’s less admin than opening a savings account, with its own account number. So when you have the facility enabled, and payments are allowed to go through when your main account balance (minus pots) is £0, you are effectively spending your own money, provided the amount spent doesn’t exceed the balance of your pots.