What about credit cards?


(Alex Frith) #124

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


(Lewis) #125

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.


(Alex Sherwood) #126

Here are some more ideas for this feature from @jshrager .


(Alex Sherwood) #127

We got to hear what this solution is at the open office event on the 25th July :tada:

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?
(Oliver Ford) #128

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.


(Jolin) #129

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.


(Leon) #130

Great point but all you are doing is skipping the company administrators altogether and claiming off your credit card company instead.


(Sacha) #131

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.


(Jolin) #132

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.


#133

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.
S


(Leon) #135

Not really as yes you are covered but it’s at their discretion. So they can refuse you for any reason they like. With a Credit Card your right to redress is enshrined in law.


(Jolin) #136

And whilst they usually make good on any issues, resolving them with PayPal can sometimes be a very frustrating exercise involving multiple calls.


(Khilan Khatau) #137

I’ve been using Monzo for a while now and it’s completely helped me with my budgeting. However, recently I’ve been using my card less and less. The reason for this is because I have an AMEX which protects my purchases and I get points too.

I would definitely like to see a Monzo Credit Card at some point in the future. The ability to categorise each purchase AND have protection would be a win win situation.


(Marcel Ruhf) #138

I don’t think they will do that, given that their approach is to only offer a current account with a maketplace offering financial services from other providers (and that Section 75 purchase clause only applies to purchases above £100 I believe, anything less is covered by best-effort chargebacks, where your bank and the merchant’s bank cooperate).


(Jack Donovan) #139

Well, no then.


(James Milligan) #140

So I really like my Monzo account and how I can see exactly what is happening with my money in real time, but now that I’ve graduated from university, got a full time job etc, I’ve been told by multiple people how important it is to build a credit rating. The purpose of this would be for a mortgage or some big purchase in the future. I’m under the impression that the main way to do this is by getting a credit card.

I have no interest in borrowing money right now, and whilst I see the benefits in having one for a car hire deposit, and maybe certain purchases for protection, I don’t really want to use one on a daily basis where I can’t monitor my spending so easily. I think the points/rewards schemes are cool, but I’d choose to have the Monzo interface with no rewards, over a credit card system with small rewards.

My main questions are: Can I build my credit rating in other ways than a credit card? Or is one small direct debit from a credit card enough to build a good rating? I’m considering getting a Tesco credit card, seems as that’s where I mainly shop and refuel, which means I’d probably end up using my credit card there for the points, meaning my spending would end up split between two accounts and that’s not what I want… So maybe I should just avoid that temptation and keep everything in Monzo, doing the minimum required to build a credit rating!


#141

Or is one small direct debit from a credit card enough to build a good rating?

Yep definitely. That’s what I’m doing, got a card from Capital One (which is actually quite nice, the app is decent and the web interface is awesome considering it’s a legacy bank) and I just use it for like half the credit limit every month, and it gets paid off in full via either direct debit or Faster Payments so I pay zero interest.

I would be against a Tesco or any kind of store-branded card just for the privacy aspect of it, unless you actually want to take part in their loyalty scheme and share your shopping patterns.


(Emma (still not the app)) #142

Things like mobile phone contracts help as well.
The credit card is a usual way. Do 1 shop a week with it and pay the full amount at the end of the month

Good impartial advice www.moneyadviceservice.org.uk/en/articles/how-to-improve-your-credit-rating/amp

And disagreeing with the above I’d say if you shop at Tesco get their card as you’re already giving over your info for club card points


#143

Things like mobile phone contracts help as well.

Utilities and phone contracts do help, however I would advise against locking yourself into phone contracts considering those companies always end up screwing something up in one way or another, and this is where being able to jump ship really helps.

I recommend just getting a SIM-only 30-day rolling contract or even a pay and go.


(James Milligan) #144

Thanks for the advice guys. I’m sorted with a business phone so that’s not a payment I’m worrying about at the moment, and all bills are covered by my landlord… the only direct debit I have right now is a gym membership so hopefully that’s enough!

I might check out that Capital One card and read into the credit rating a bit more.

Tesco do already get my shopping habits from my clubcard I suppose.