Like an overdraft but with your own money.
Option to add your own charges so that “interest” or daily charges can be directed to a savings account of your choice like “spare the change”.
Everything like an overdraft so minus balance on your main account, charges, a mini “underdraft remaining” balance.
You could probably set this up with IFTTT, add a button to your home screen and every time you click it, it moves a set amount of money into a chosen pot
I don’t even understand this
Hi Michael & welcome
You can’t ‘achieve’ this without an actual overdraft.
But you could put money into an ‘Overdraft Pot’ which acts as a buffer - let’s say £500 as an example. Then, when your main account is getting low (or will soon go ‘overdrawn’) - move money from the Overdraft pot into the main account to cover the shortfall. At this point, choose if you wish to also charge yourself what would be an overdraft use/interest charge by moving an applicable amount from the main account into a savings pot. Then, next income/pay cycle, make sure you top up the Overdraft pot back to £500. Spend, move, repeat…
Bingo! - Overdraft functionality without ever getting into the red.
The above is what I do
If it’s a direct debit that will take you over your limit, Monzo will notify you in advance too.
I think I’ve seen someone talk about doing this on the forum in the past.
They called it a “faux-verdraft”.
Otherwise known as “having savings”
To be fair this exactly what I tell myself when I withdraw from a savings pot; I am borrowing from myself at a cost of 0.43% or whatever paltry sum I now get from my charter savings pot.
No. It has to have a catchy name
No good for a recurring card payment
It works for any payment, as the move from the ‘overdraft’ pot, optional self-interest transfer to a savings pot and the top-up of the overdraft pot after the next pay cycle starts is all manual and all from the main account. This even works with Joint Accounts (and it’s not often you’ll read that statement from me)
But it means that I have to stay on top of it and constantly plan and plot payments.
It’s like me suggesting “spare the change” and you saying “why don’t you just do it manually?”. The automation is what makes it helpful. The automated drawing from a specific savings pot in to the current account is what sets this apart.
To counter your argument, that’s what you’re supposed to do with your finances and how you get good at managing/understanding them.
Automated or not, you open yourself to some big issues unless you keep on top of it all regularly.
Not particularly. I’m on top of my finances but i lose track of a payment here and there. I don’t store the bulk of my money in my current account. My current account is exactly that… Current. It has money in for around a weeks worth of expected payments whilst the rest is in various pots, savings accounts (with monzo) and investments elsewhere.
You can be on top of your money and still find yourself in overdraft.
This promotes better financial management by giving yourself a set aside buffer rather than savings.
You’re kinda contradicting yourself here. It’s easy to do if you’re not on top of it but it’s not both.
If you have every financial outgoing ever planned you’re one of two things.
Highly highly efficient with a high degree of foresight.
And if there was no need for “Underdraft” there would be no need for Overdrafts.
Im not following where this is going could you really simplify the idea for my smol brain. Dinosaurs dont have good IQ
What are your thoughts on Starling Bank’s overdraft, which won’t charge you when you use it if you have an equal amount of savings put away. It doesn’t move money around, just offsets the balances in the background?
Trying to understand you underdraft idea, and wondered if Starling has kinda got there?