The Overdrafts Pricing

I guess we’ll wait and see but I doubt it - something will have to pay the bills. Again, the legacy banks do it by operating the current account at a loss but makes their money back with huge unexpected fees. Starling will probably not be doing that so something will need to be “overpriced”.

However, isn’t “overpriced” a matter of opinion? They are selling you a service (a good current account), and you have to pay for it; seems perfectly fair. In this case it’s even better as you don’t even have to pay just for the current account, merely for an optional overdraft.

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I am sure @alexs can find the post but Monzo have previously stated they would not be using deposits for investments and so that revenue stream is off the table. Sure they could open it up in future and I would expect them to again be open and honest about it.

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I actually don’t know if this is in their business model. I don’t think Monzo are trying to be like Atom Bank, for example. I always thought Monzo is all about the current account. I think @Frankiejr has it right, it will be about reaching a large customer base rather than a diverse range of financial products.

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It’s sort of on their ethics page. If they have explicitly ruled it out then I’m afraid I haven’t been able to find that from a quick search. But for what it’s worth, I’d be surprised if they do.

Haven’t they said they expect to be in profit by 2019? :face_with_raised_eyebrow:

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Loans yes, credit cards no. The latter can be provided by third parties in Monzo’s marketplace.

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Completely hypothetical scenario.

I found myself in a position where I am now constant in my overdraft with Monzo by £100 per month and cannot see a way out of it. This starts to cost me a constant £15.50 per month (50p per day). I then get a Monzo notification stating they have noticed the situation and wish to help with a short term loan of only 10p fee per day (£3 per month) if I pay £13 per month to settle it). Now I’m out of my overdraft and running normal again. And my £100 has cost me £30 in fees instead of £155 in fees.

Now this is only £100 overdraft being cleared. But this concept could be worked for any amount and for me is more responsible in helping the customer get out of an unmanageable situation.

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They have different uses & it would earn them referral fees when you sign up via the marketplace.

I hope this comment was a joke :slight_smile:

Yep can see that, though I have mixed feelings about if I’m entirely honest. Though in many ways it’s no different from what legacy banks do: oh look you’re in the hole by £2000 do you want a loan which would be cheaper ? I kinda really don’t want Monzo to do this. Agree it makes sense but it also feels sharky to me.

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Because this is exactly the difference between Monzo and the legacy banks. The overdraft is “overpriced” because they only expect it to be used sparingly, making them a few pounds a month. When they notice you’re constantly in it they try and help you out with a more adapted product like a personal loan. :+1:t2:

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So could you answer the squirmy question and advise us as to the advantages of a Monzo account that make the overdraft fee worthwhile?

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Lol funny how we have different opinions on this.

My legacy bank are very good at making offers like this and I hate it. But then, I don’t trust my legacy bank as far as I can throw them. I know others would call it excellent customer service; to me it’s keeping me tied in with them. Calling me up to offer me a pre-approved loan, when I haven’t asked for it is a no-no.

Yes I’m cynical, I don’t deny it in the slightest.

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The short answer is try it, you’ll see for yourself :slight_smile:

I’m not trying to be unkind but honestly are too many to list & I don’t have time to explain them unfortunately.

I’d recommend checking out the blog & these tweets if you want to understand Monzo’s benefits.

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I kind of get what you are saying but this is how Monzo want to be more customer focused in financial management. Sharky I disagree though I agree it completely depends on how they manage it. But as I say it is hypothetical and my own thoughts based on the info I have read from Monzo.

And the alternative should Monzo not try to assist is not good for either party. For example just a “we notice…, you got this or want some assistance?” Makes a massive difference mentally for someone in in what may be a spiralling situation. Something I wish was offered to me many years ago. :+1:t2:

I am not talking cold calls, but a notification or in app message would feel a lot more subtle if done right.

I agree it’s a fine line. I do think Monzo will be able to walk the tight rope though. They’re extremely ethical, something I love about Monzo.

The bulb fiasco does come to mind though :sweat_smile:

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Bulb advertising in the app which upset some customers. Didn’t bother me, I didn’t see it but if I had think it wouldn’t have been an issue for me as Bulb are also fantastic and very ethical.

I think this was a test and with a small user base. As long as Monzo learned from this I have no issues.

Worth noting I have no Monzo overdraft yet (@finitejest :wink:) to try it out and give a better opinion and was also not in the user test for bulb. Though I do appreciate what they are trying.

It’s all about trying in the right way and learning quickly.

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Ah still waiting ? I know you’re keen to give it a spin. I won’t be applying for one but as I said earlier; very keen to hear from those who are.

Seems we all have different triggers. :innocent:

Plenty of users also complained about the fact that they would have saved / earnt more if they had signed up for Bulb directly, due to their referral scheme, rather than via Monzo.

It was interesting to see that Bulb are one of the top 50 merchants that Monzo users pay Direct Debits too though :thinking:

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