Starling Feedback

I don’t have an issue with the OD fee and the rationale behind it (I know people do, but I appreciate this isn’t the place to discuss it).

I guess it’s a little hypocritical (wrong word, but it’s the closest I could find), to talk about simplicity and “no APR’s” on OD’s, but then do exactly that on loans.

If the thinking was that people will be confused by APR’s on OD’s - They will still be confused by APR’s on loans.

To reiterate… I’m not bothered either way - Just highlighting the differences.

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But a loan has a regular repayment plan, so it comes across the same as the OD fee. You know that by using STC, you will have to pay back £x every month, so it’s predictable. As an APR-based overdraft varies day-by-day, it’s unpredictable and hard to understand.

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Valid point!

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I’m not sure why this is any different to any generic loan and overdraft combination from absolutely any other bank? I get the Goals impact in the overdraft but aside from that, this feels absolutely vanilla to me.

If I take a loan from First Direct I’ll pay interest on it even if I have money in my account. Am I missing some subtlety in the Starling discussion?

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They’ve linked the product to your overdraft. So you have to have an overdraft, and you can convert a portion of that to a loan (the proportion depends on an internal credit ‘score’).

Edit: to be clear it’s based on the overdraft they’re willing to offer you, so if you are offered £4000 but only enable £500 you can loan part of the £4000 not just the £500.

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OK, I guess that gets around the separate credit checking (assuming that’s normally required) but, once it’s a loan, then it’s the same as any other loan in that you have a fixed repayment plan until it’s done?

Still not sure where the real difference lies with any other bank (other than the conversion thing). Taking a loan from them doesn’t sound any better or worse than any other loan from a bank. If the loan is a financial mistake for the individual, Starling seems no worse than anywhere else in terms of mistake severity.

If that’s all true, why is anyone trying to draw parallels with the whole ‘pots & overdraft’ thing? That makes no sense to me.

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Once it’s set up it is basically a fixed term loan you can repay at any time. The comparison comes, at least for me, in that they offset overdraft balances with your Goals balances.

So if you have that £4000 overdraft and £1000 in your Goals, it shouldn’t really be suggesting a loan for anything less than £1000 as you could use your overdraft for free. Now if you want to take it after being informed, that’s one thing, but there’s little clarity around this.

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OK, fully agree with that. I got the impression it was the implementation under question rather then the recommendations.

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Confusing to remeber. Where’s the consistency?

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There are a few issues with the implementation (one being that right now you can be offered a loan at a higher rate than your overdraft), but personally I think the linking to overdraft has caused a lot of confusion.

If they just launched it as a standard personal loan that’s one thing (though given the app has issues I’d say their priorities are wrong), but it wouldn’t be a very interesting or competitive product.

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The reason why Goals & overdrafts are being discussed is that Starling don’t charge you interest if you use your overdraft but have the same amount of money that you’re borrowed in a Goal. But they do charge you now if you take out a loan (even if you have the same amount of money that you’ve borrowed in a Goal). So they’re making money by lending to you even when you have savings.

I don’t see anything wrong with that - as long as the user has a clear understanding of the situation - but obviously there was a lot of fuss about Monzo charging you interest for using an overdraft while you still had money in Pots..

There isn’t really any, and that’s a problem with Starling that extends beyond this. I do think offsetting the overdraft with all balances held is a good thing for the customer, but the loan product doesn’t sit well with this.

I wasn’t really here for that, but I do think that from a customer perspective the Starling approach is more customer friendly. But Monzo’s approach isn’t paticularly bad, it’s just standard banking practice so nothing special.

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So what happens if I want to take a £3,000 loan out for car deposit but I have an overdraft of £500 I don’t use?

I guess I can’t?

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Are you asking about Monzo or Starling? :smile:

Starling :baby_chick:

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You’re out of luck then because you can only borrow a portion of your overdraft.

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Right I see,

To me the fact we’re even discussing how it works means it’s flawed. Should be understandable from the first read.

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It’s going to be interesting to see what Monzo’s come up with, in terms of the design :grin:

They’ve been working on this for over a year so this is obviously harder than it looks.

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Actually if you have been offered let’s say a £4000 overdraft and have £500 enabled, you could borrow £3000 (risk scoring permitting) as a loan. You’d be charged whatever loan rate they offer.

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