Now that users, who’re previewing the current accounts, have been asked to register their interest in testing the overdrafts, a lot more details have been shared about the them. So I’ve created this open Wiki (which anyone can edit), to gather all of the details in one place.
To see what’s changed after an update to this post (when it’ll appear at the top of the new / updated topics list) click the pencil in the top right hand corner of the post.
The pricing & fees
The current pricing
50p per day, once you’ve gone overdrawn by more than £20. That means that the most a user can pay per month is £15.50. We don’t yet know the maximum amount that users will be able to borrow.
We’ll reject payments that would take you over your overdraft limit or into overdraft if you haven’t applied for an overdraft with us. Rejected payments won’t cost you a thing.
In the future, we’ll also notify you in advance when it looks like this might happen so you can choose ahead of time whether you’d like an overdraft or to reject payments.
There are a few cases where your account might still go overdrawn without you expecting it — most notably with delayed transactions from organisations like TfL or bills from hotels that come in late that we can’t reject (because they’re presentments — more detail here). Most of the time, these payments should fall within your £20 buffer, but if they don’t, we’ll notify you through the app and give you at least until midnight of that day to clear it. If you don’t clear it, we’ll just treat it like the normal overdraft and you’ll be charged 50p/day. This will also be reported to credit reference agencies. Long term, we’d like to make the whole process around these delayed transactions even easier and clearer!
Will applying for an overdraft affect my credit score?
We’re very keen to minimise any impact on your credit score from using Monzo. When you sign up for a current account with us, we do a “Quotation search”, more commonly known as a soft credit check. That means we can work out whether we can offer you an overdraft, but it has no affect on your credit score otherwise.
If you then take out an overdraft with us, we’ll do a full credit search and report the fact you now have an overdraft to credit reference agencies. This may affect your credit score.