I actually think (aside from the 50p a day charge, but thats another thread for another day) that the way Monzo does it is a good way. However that is not what Monzo’s terms and conditions state. They are very clear (my bold for emphasis).
Making payments
You need enough money in your account to make payments. But some transactions
that would take your balance below zero may still go through. If that happens, we’ll
let you know the amount you’ll need to repay before the end of the day.
If your balance is below zero, we won’t charge anything up to -£20. But after that,
we charge 50p a day at the end of each day. We calculate overdraft fees at the end
of the day and take them from your account on the first day of the month.
What is an account? What is a balance?
Are they just the card? Are they the card and the pots?
What is the definition of the pot?
It has been mentioned many times (with analogies of envelopes in envelopes) that pots balance and the card balance are one account. @nanos posted a statement showing both were the same and the account screen in the app shows a balance together. Therefore it is implied that the card balance and pot balance are on the same account.
Therefore if you have £500 in pots but a -£30 on your card then you are £470 in credit. The terms clearly side with that view.
[…] You need enough money in your account to make payments. […] If your balance is below zero, we won’t charge anything up to -£20. But after that, we charge 50p a day at the end of each day.
My total account balance in this specific scenario isn’t below zero so shouldn’t be charged a fee. I’m not saying Monzo shouldn’t charge a fee. But their terms and conditions are clearly saying they shouldn’t and they are. Banks can’t have implied terms and conditions or terms and conditions that hopefully customers understand. They have to be in black and white what Monzo intends to do and it wouldn’t take more than 2 or 3 added lines to their current terms and conditions.
Monzo just need to amend their terms and conditions defining what an ‘account’ and ‘balance’ are.
This does feel like it is going around in circles 