phildawson
(Sorry, I will have to escalate this.)
555
Yeah it would be brilliant if you wanted to say buy a car and knew they would give you the max £12,000 limit to get a decent used and only have six quid to pay each month and as long you need to get that amount saved up. You would have to be optimistic that they would keep that deal for four years and still be in business.
As you say if they went tits up / changed the terms four months into 2020 which is very likely you would be screwed and either need to on an actual loan to cover it or sell it.
You have a point, but I am pretty sure there are strict rules preventing companies simply increasing interest rates. Cahoot for example had to pay back millions in back dated interest to customers after the interest rate hike. But again we have the changes in the overdraft rules with those already in their overdraft could face paying 39% interest with Monzo. I like Tandem deal however I can’t see how it will last the long term as it is clearly open to abuse.
phildawson
(Sorry, I will have to escalate this.)
557
I think they are using a loophole though by it being a membership fee, and as it’s a rolling contract I can’t see anything that would stop them either stopping the deal, or raising the membership fee with 60 days notice.
Even if they raised it could see work out better in specific scenarios, I think the key thing is them actually staying in business.
For every £1,000 a customer puts on their card and keeps it on their card Tandem will have to pay someone else interest for it. Probably one of their customers saving money in their account at 1.5%.
As they are a bank, the interest they pay is around a few percent maximum based on the inter bank lending rate. Also they they can lend out more than what exists on savings based on the Fractional-reserve_banking rules, so long the money is paid back.
Because of the Fractional-reserve_banking it does encourage the increase of the money supply in the long term which leads to inflation which averages 2-3% every year or may I say your money in the bank reduces in value 2% every year.
Currently have my eyes on Tally money who offer bank account linked to the gold standard and they plan to offer direct debits, fast payments and other features in the next coming months. The UK pound due to inflation has devalued by nearly 90% over the last 30 years compared to the value of gold.
What do you think the chances of Tandem back tracking on the March deadline for joining or losing your cashback card will be, given the number of people who have said that they would not pay the “membership” fee?
They really could shrink their customer base by 80-90% with this move. As a Tandem customer I would have expected that they would have put some feelers out to see how their userbase felt about the changes.
Especially when there’s no choice other then to switch or go away.
It would have been a smart move if they announced this as a new product alongside saying current customers will be switched to the Journey Card (ie no Cashback).
People with that level of monthly spend use Amex.
I put between £1000-£2000 per month through Amex (with 1% cashback, no annual fee), and use Tandem overseas and in places where Amex isn’t accepted. Usually that is about £80 per month. Last month it was £1,600, mostly on car repairs, and as my credit limit is only £1,500, vs £12,600 on Amex, I had to pay off the balance before going into the garage, and pay off the balance again before leaving.
Looks like Tandem are planning a new current account:
The quote:
“A current account for modern-day money. Instant notifications, bill splitting, Apple and Google Pay, you name it, we’re building it, plus a few unique/new features coming too.”
If this is the case, it will be interesting how their new £5.99/m will play in, interest free overdraft or loans?
That certainly could be very interesting if it integrates with the paid card like that.
I’m surprised that I’m excited to see what they come up with.
phildawson
(Sorry, I will have to escalate this.)
571
Tandem developers at the moment…
I would be focusing 100% efforts on making a migration tool so that people can choose to downgrade to Journey so they aren’t losing a good 90% of customers in March.
They may offer an alternative solution a month before the expiry of their service but it is easy to understand as part of the business model to push their more profitable premium package and only offer an alternative less profitable solution when clients attempt to cancel or the near end of life of their existing service.
With banks now moving to a business model of lower interest charges on saving and 40% interest on overdrafts, it will be interesting how Tandem package stands out for £5.99 month for a 0% on an overdraft, 1.5% on savings on the current account, 0.5% cashback (on both the current account and credit card) backed up with a credit card also with 0% interest. (Only assuming what they may offer)
One lesson in business, you have to offer something original and different before anyone buys your product. IF you offer something that already exists on the market then folk are not going to switch or if they do switch they will switch to what is seen as the more reputable product or supplier who has the bigger wallet.
IF Tandem was losing money from their existing cashback card then it is completely understandable the steps they are now taking.
They just sent the same email they sent a few days ago but with a different subject: “URGENT: Important changes to your Tandem Cashback Card”. Uptake must be low…
I’m still not applying for the new offer as it is not suitable for me.
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phildawson
(Sorry, I will have to escalate this.)
576
Yeah I think they may release a way to continue with the Journey card just before, as giving them that option now may lose people that would have coughed up. However Ricky made a silly mistake imo and let on that it hasn’t been coded yet, hence the cat meme above about their devs need to get cracking.
on an actual loan to cover it or sell it.
