Starling Feedback

[admdly]

Overdraft, you will get no fees. Loan will charge you minimum 11%.

[Peter_G]

@simonb

Do I take a £500 loan or do I go into my overdraft by £500? What’s the best option for me?

Overdraft. It’s offset against the 500 in the goal so effectively 0pc.

[simonb]

There’s no fees on the overdraft? I thought there was a percentage based fee.

[admdly]

Anything in your goals offsets this. If you have £500 in Goals you won’t be charged if you go -£500 in your main account.

[Rat_au_van (Em)]

There’s a world of difference between not having the right dates on a summary and a lending product

[nickh]

@simonb

OK.

So let’s say I have a £0 balance right now. I’ve got £500 in a goal that I don’t want to touch. But I also need to spend £500 on something urgent and I don’t exactly know how or when I can pay that back without removing money from the goal. Might be a month, might be more.

Do I take a £500 loan or do I go into my overdraft by £500? What’s the best option for me?

If you want the comfort that you know exactly how much you will need to pay each month (for, say, 12 months), then take the loan.

If you think you may be able to pay it back sooner, or it’ll only be a couple of months or so - Take the OD.

You can still pay a loan back early if you need to.

Of course - I would strongly advise you use your Goal money here to save on interest

Edit to include what I missed (that the others have already said).

The £500 in goals will offset the interest fees!

[admdly]

If he has £500 he won’t touch in a goal and does not want to pay regularly, a loan is a terrible and expensive idea.

[simonb]

Gotcha.

But if I have no money in Goals, and I take a loan, and I repay it from the overdraft… I’m getting charged the loan fee, and the overdraft fee?

[admdly]

That remains outstanding, but on the surface if you paid the loan with your overdraft you’d pay interest on the loan and the 15% overdraft on any negative balance.

[nickh]

@simonb

But if I have no money in Goals, and I take a loan, and I repay it from the overdraft… I’m getting charged the loan fee, and the overdraft fee?

I believe so (not confirmed).

But I’d be surprised if Starling offered an overdraft to someone who would be in that position.

[admdly]

They already sort of do. You could loan £2000 of your £4000 overdraft, and pay the loan with the remaining overdraft.

[nickh]

@admdly

They already sort of do. You could loan £2000 of your £4000 overdraft, and pay the loan with the remaining overdraft.

If you have been approved for a 4K overdraft - Then I assume you could.

But a lot of these examples are more hypothetical - In the real world, no one will do that (you’d hope )

[alexs (Alex Sherwood)]

@nickh

@simonb

But if I have no money in Goals, and I take a loan, and I repay it from the overdraft… I’m getting charged the loan fee, and the overdraft fee?

I believe so (not confirmed).

But I’d be surprised if Starling offered an overdraft to someone who would be in that position.

Surely Starling aren’t charging two lots of fees - an overdraft fee & loan fee - for borrowing the same money? This is hilarious

[nickh]

@alexs

Surely Starling aren’t charging two lots of fees - an overdraft fee & loan fee - for borrowing the same money? This is hilarious

If you pay off a loan with an overdraft… Why wouldn’t you get charged 2 lots of fees?

FYI - In this example, the 2 fees would come to less than 1 OD fee.

[alexs (Alex Sherwood)]

Ah ok, I think I misunderstood the situation SimonB was describing

[simonb]

@nickh

the 2 fees would come to less than 1 OD fee.

This is why I (as a consumer) prefer the daily flat fee concept (Not just saying that because I work here and that’s our approach)

I feel like I’d have no understanding and no daily/monthly/annual visibility of what you’ve just said. Two potential percentage based fees, at different rates, some offset against money I might have set aside and some not? I get that for lots of people this all might be easy to understand, but I think for a significant amount of people it’s not easy to understand.

[nickh]

@simonb

This is why I (as a consumer) prefer the daily flat fee concept (Not just saying that because I work here and that’s our approach)

I feel like I’d have no understanding and no daily/monthly/annual visibility of what you’ve just said. Two potential percentage based fees, at different rates, some offset against money I might have set aside and some not? I get that for lots of people this all might be easy to understand, but I think for a significant amount of people it’s not easy to understand.

I completely understand that.

But when “Spread The Cost” goes live, you’ll have a similar situation where you have 1 flat fee, and 1 APR fee at 15%?

I don’t see how that is different to these examples (apart from the 50p per day vs an APR rate on OD’s).

Edit - Of course we are all talking like we will be living in our OD’s AND having a loan to pay off!

Let’s hope none of those things actually happen!

[admdly]

The flat fee approach works when it’s tiered, as it is it’s punitive for small overdraft usage. Simplicity is great, but that doesn’t make the product better for the customer. I’d also say, regardless of how messed up Starling have made their borrowing offerings, offsetting the overdraft with any other deposits held is a nice consumer friendly move.

[simonb]

Yeah, absolutely, but I think the combination of two percentage based things is where it falls apart for a lot of people.

Regardless of whether I have to dip into my Monzo OD to cover Spread The Cost, I still know that the OD fee will never be more than £15 on a 30 day month and then I can understand the STC fee purely based on the value of the STC loan over the fixed term.

[admdly]

But what if I don’t use STC and I use £100 of my overdraft for a month, for example? One is £1.16 and the other is £15.50.

Edit: and if I have £100 savings, it’s £0 and £15.50 in the other. Doesn’t seem right.