As I think you probably know, the banks offer students interest free overdrafts as a ‘loss leader’ because they know that they’ll make the money back once the student is no longer a student.
At that point they’ll start paying interest on the pile of debt that they’ve (probably) taken on, while the same inertia that stops most people from moving banks will enable the bank to cross sell products to them.
As a result, most students end up more than paying back the interest that they would have paid during the interest free period.
So…on the one hand it makes sense for Monzo to offer students interest free overdrafts, in order to compete with the banks, particularly because viral marketing (which Tom’s said is key for Monzo’s growth) should work especially well in a university.
On the other hand, as Richard points out, Monzo is relying on the revenue from overdrafts in order to break even this year.
If Monzo doesn’t offer interest free overdrafts, students should still be able to track the majority of their spending (apart from what they spend from their legacy bank’s overdraft), by transferring their money to a Monzo account.
But I’m not sure which option makes most sense for Monzo’s business model…
Don’t worry - we don’t have much information about the current accounts in general yet but I’m sure that once Monzo have finalized their plans & the launch is close enough for us to be able to do something with the information, they’ll tell us more 