But Pots aren’t separate savings accounts @iansilversides, otherwise I would agree with you.
480 thread long discussion about this, including a response from the CEO…
I’m fine for debate, but has anything changed?
Sorry, it was more a question. I was curious as to what the rate would be but couldn’t find an answer so looked at a calculator and was wondering if someone could confirm if the figure I got back was correct. I wasn’t trying to start an argument.
I do want a small buffer in the extremely unlikely event I forget to transfer from a pot. This is probably more force of habit as in the past it was more difficult to keep an eye on things than it is now. But I would rather be safe then sorry and having payments bounce doesn’t go down well on your credit history.
I also think taking pots into account is a good idea. I use pots because I’ve never been great with money and these allow me to ‘hide’ my balance from view. This is the whole reason I have a Monzo account. Not because it’s ‘cool’ but because it genuinely has helped me get into a positive position with money which is something I’m extremely great full for. I suspect I’m not alone in this either.
I have no particular strong feelings about the overdraft facility, as I don’t use it. However there was a time of my life when overdraft use was the norm, and a fixed overdraft fee would have made my life so much easier than the convoluted calculation my bank used (and charged me for at the most inappropriate times). So for that reason I do engage with the topic because IMO Monzo have taken the right approach here, by going for very clear daily fees.
If your balance goes below zero you will get a notification and it suggests you move money from your pots. Same if you have a direct debit due the next day and not enough money to cover it
This is why I have my overdraft turned on, just for peace of mind.
In any situation when I would need credit I would use a credit card, which again I only have for peace of mind, I never actually use it for credit.
And you have until midnight to get your balance positive, whereas some other banks have a cutoff of ‘early afternoon’
I think some the issues with an Overdraft could be solved if there were custom IFTTT/ if functions that you could set to move money from POTS to Main account and vice versa.
The people who did not need an overdraft would no longer need to use an overdraft.
If anything POTS need to be redesigned to allow for custom functions rather than custom pictures as custom rules would allow automated rules to happen.
As a design feature, please allow emails(+push notifications) to be sent thereby reassuring people that the transfer has gone through.
Also does Monzo have any User research stats to back up why they made the rates they did?
It is all situation dependant. If you have money in a pot and can avoid going deep into debt then of course that money should be used. If you are in the overdraft for one day… Maybe not.
How do you police this? I don’t know
On a side note, Chip is looking to offer an overdraft facility which plugs into your bank account and uses savings. A good idea, if it comes off. It has been widely well received as a concept. Why not use your savings to ensure you do not get hit with hefty repayments? If necessary (situation dependant).
I wasn’t trying to shut down debate at all - I see it differently to you , I think people should live within their means, wherever possible, and I think the way that Monzo does overdrafts is trying to encourage this - actually to the detriment of Monzo earning interest on any overdraft borrowing , I see it as Monzo saying if you have money in a pot why not use it before you use an overdraft , but its your choice , but if you chose not to use your pot money - and some would say act irresponsibly (?) - why shouldn’t Monzo charge you for using an overdraft , I feel its a decision from Monzo that is encouraging you to take responsibility for your own personal finances to the detriment of Monzo not earning fees - good on them I say .
Other banks will encourage you to use “free money” and get used to life seemingly having more money than you actually have - which is great ( ? ) until something unexpected occurs - loss of employment , reduced income, unexpected bills etc and then you find yourself with too much borrowing for the money you can earn and potentially, quite quickly no way out of the spiral and no sympathy of having had money in your account to cover the free money that you have spent , just large unexpected overdraft fees because circumstances beyond your control have changed.
You could say the same could occur with Monzo , yes it could, but you are at least going into that situation with your eyes wide open having spent money in an overdraft that you knew from the start wasn’t “free”
I still maintain that Starlings approach is good, and unique. However I think it may normalise being in an overdraft and that’s what I’m uncomfortable with.
Plus the converting an overdraft to a loan facility.
However, I don’t any to get dragged into this again.
I don’t believe starlings way normalises being in an overdraft. The figure on screen may say minus but we all know the goals count so in my instance I’m always in the black. I just don’t have to rush to move things around to sort out the minus figure the app displays to me.
what do you have money in goals for though, specific saving goals or just fritter money ?
To add to my own comment I can’t work that way in my starling or Monzo joint accounts do have to always move things around before buying, a pain but just how I work it to stick to budgets
I’m not sure there’s anything new to add here that hasn’t already been said.
Starling works one way, Monzo another. You can just choose the one that works for you.
Mixture of both but life happens and if I need to temporarily take something for a savings goal/pot I shall do as not to incur any charges.
@iansilversides my comment wasn’t aimed at you, which I think you’ll see if you reread my post. I responded to you separately.
I like the way Halifax shows the cost of an overdraft.
There’s a slider, so you can see for different amounts.
For every full £7 you borrow, you’ll pay a daily arranged overdraft fee of 1p.
Borrowing £1,000 on your account will cost:
£1.42 for 1 day
£9.94 for 7 days
£19.88 for 14 days
£42.60 for 30 days
There are no other fees for using this arranged overdraft.
Borrowing £250 on your account will cost:
£0.35 for 1 day
£2.45 for 7 days
£4.90 for 14 days
£10.50 for 30 days
I find it interesting the way different providers deal with showing the customer how much an overdraft will cost.
Interestingly, the FCA have recently produced a consultation paper on tackling Overdraft Fees - https://www.fca.org.uk/publications/consultation-papers/cp18-42-high-cost-credit-review-overdrafts-consultation-paper-and-policy-statement
There is a Forum Thread discussing the consultation and the “banning” of overdraft fees (fixed charges) all together - Banning overdraft fees
I really don’t like how banks within Lloyd’s Banking Group charge for overdrafts. The 1p per £7 per day is too confusing. I was glad to see the back of this when I switched to Monzo.