My partner and i have a ‘joint’ Amex credit card and a joint debit card. We use the credit card for specific things(Like joint drinking, eating, holidays, big purchases). I love Monzo and try to put as much of my personal spending on it as possible but basically i’ll never get my partner to give up on us using the joint credit card and switching to the joint monzo that will be provided in the future. So unless Monzo provide a credit card with good points etc we will never fully move onto it. This is because credit card appeals to him for all the reasons mentioned above. There is the legal protection over £100, the air miles and points. There is also the interest free 1 months free cash advance(we pay it off in full every month)
I have an AMEX card which is quite generous in terms of miles, and it has served me well.
I will however be switching to Monzo fully - I value knowing my exact balance at any point in time than constantly having to subtract my credit card outstanding balance from my current account balance, to know my exact net worth. Though it has never happened to me, you could quite easily find yourself in a place where you owe more than you have.
I still earn air miles, and more importantly, tier points when I fly with BA. It is worth noting that Air Miles are severely restricted as to when you can use them (in a certain window, when seats are available). I would far rather be wholly in control of my finance with Monzo, and know where my expenditure is going.
You will soon realise that credit cards are just a trap to get you to overspend with the lure of gimmicky points. One day you could be tempted to not clear the balance in full and the nightmare will forever begin. Being overdrawn hurts far more than credit card debt.
I’m personally quite sceptical about credit cards. I agree with more or less all of the comments above - they are great for certain people. I myself use an Amex card for bigger purchases for the CCA protection and if someone is going to give you free cashback… why not take it? Having said that, I use my Monzo card for all my day-to-day expenditure as I value monitoring my expenditure far more than the 1.25% cashback I get - I am sure I save more as a result.
One of my problems with credit cards is that much like many things in life (e.g. booking train tickets) I feel a lot of the time they punish people that are less organised. Personally, I don’t see why it is often considered reasonable to take advantage of this - at the end of the day people are all different and some people don’t want to organise their lives 2 months advance (for train tickets) nor do some people want to constantly monitor their finances - particularly if it’s difficult to do. For example, you get some great interest free periods on credit cards which can be a real life saver for some. But this interest free period is withdrawn as soon as you breach any terms e.g. you forget to make a payment, accidentally exceed your limit or of course many people don’t end up clearing the balance. This can be quite damaging for many as they may have transferred large balances onto a card and end up paying quite considerable interest charges.
This is a really good point, I get it, ‘free money’ sounds great but 1% - 1.25% cashback only = £10 - £12.50 back for every £1,000 you spend.
For me, being able to keep track of my spending using Monzo so that I know when I should be reducing it, in order to save the £10, plus quite a lot more, means that I end the month far better off than I would if I had spent the money using a credit card.
Yes but I put all my shopping, fuel and big ticket items on my card, paid off each month. But my cash back last year was about £160, so for me this is free money and not to be sniffed at.
If I was spending £1000 a year on my card I might agree that £10 probably isn’t worth it, but 15-16 x £1000 is, and I think that’s the issue for some.
Loyalty points and other usage incentives
Ok so that’s £13 per month, I still save more than that each month using Targets
Loyalty points and other usage incentives
Tom shared his thoughts on the evolution of air miles & cashback rewards in yesterday’s interview. It sounds like there might have a solution in mind
Wasn’t the EU also suggesting that costs should also be lowered on credit cards, but as usual greedy banks have cut the cashback rates and not reduced costs, so now they keep all the money. So actually the EU has cut customers cashback and not bank costs. Thanks for nothing!
seems to me you should be grumbling about the greedy banks not the EU!
Both I guess. Had the EU not interfered, the greedy banks would still get their cut and I would have had my 1%. Now everyone loses, but yes the banks haven’t really held up their end.
One of the main things I use my credit card for is hiring cars and with hotels. Many car hire companies require you to use a credit card for the security deposit
It’s very simple for me. If you’re sensible with your money, you’ll see obvious benefits with credit cards:
- Protection on goods
- Section 75 consumer credit
Unless a challenger bank can provide competition for the above, I can’t see them competing for the regular spending of savvy consumers.
We got to hear what this solution is at the open office event on the 25th July
I’d recommend listening to the full clip because Tom shares a lot of the context for his thoughts (including the reasons why the points that users are getting might not be as valuable as they think & how the system impacts users that can’t access credit cards) but the TL;DListen summary is:
- The future of loyalty & reward points in Europe has to be retailer funded. Or brand funded.
- To do that brands & retailers would build a loyalty platform, on top of a real time banking platform - like Monzo’s.
- Monzo can share user’s [anonymous] data [with their permission] to enable retailers & brands to make much more targeted offers
- That’s probably 2-4 years away
Loyalty points and other usage incentives
How about selling loyalty to businesses?
Something that I think’s worth pointing out, is that credit card issuers have a legal liability (i.e. by the Consumer Credit Act) for the paid-for goods or services; Monzo on the other hand says it’ll investigate, ask for more information, and start the chargeback process if the user has indeed been wronged - but that policy might change at any time. It’s nice to have if you need it, but it can’t really be relied upon.
It’d be great if users could just opt to have a ‘credit’ card, with the limit dynamically set to current account balance, and payment taken in full each month, and so the feed could remain the same with ‘real’ dates and merchants rather than one big ‘credit card payment’ entry.
I think that one of the advantages of credit cards was demonstrated by the recent collapse of Monarch Airlines. As far as I’m aware, credit card customers whose tickets/holidays were cancelled have an immediate right to a refund. But if booked on a debit card, the best that can be done is a chargeback request. Presumably this will fail if the administrators don’t have any money to pay the chargebacks (and I can’t imagine this will be high up on their list of priorities in terms of creditors).
This is one of the reasons I use a credit card for certain things. It would be great to know if Monzo have a way to solve this ‘problem’ with a standard bank account and debit card.
Great point but all you are doing is skipping the company administrators altogether and claiming off your credit card company instead.
I think in the medium term a Monzo credit card would be good. It could presumably share a lot of the code and provide an easy way to demonstrate many of the benefits of Monzo for those who are reluctant to sign up to a new current account but have less resistance to signing up to a new credit card.
I suspect the pricing model would have to be different though; a fixed fee is fine with overdrafts, but this wouldn’t work for credit cards where limits are much higher.
Yes, true. I guess that’s the real point. With a credit card, you have a contract with the card issuer, so if the product/service doesn’t come through, you don’t have to pay them. With a debit card, you have a contract with the provider directly, so if they go bust, there’s no one to claim from.
If you use PayPal though, you’d be covered there. I haven’t used it (making a claim) but I think coverage is roughly (identically?) the same as credit card.