Monzo Overdraft

hangonthebox

Anyone else had an offer through the Monzo app to sign up for an overdraft?

I got a notification through today, inviting me to activate mine. This surprised me as, although I've had Monzo for quite a while (since the prepaid card days) and converted to the current account as soon as I was able, I've only ever used it sparingly, loading the odd fifty bar on and often going months at a time without using it. I've never had an income or any standing orders set up to pay money in regularly.

Anyway, it took me to a screen where I input my annual income and then invited me to choose the amount. This could have been up to £1000 but I chose £500 - and it was activated immediately.

I live within my means, however low or high my income is (and it has periods of being very low!) so it's unlikely I will use this feature but as someone who wants to improve my credit rating, but has no desire for a credit card, I was quite pleased (presuming Monzo report to CRAs, can anyone advise?). I don't have an overdraft on my main (Yorkshire Bank) current account and was actually considering getting a Cashplus card to improve my credit rating so this may be better (and certainly cheaper!) than doing that.

davethorp

They!!!8217;ve offered me a £750 overdraft. Which in fairness seems larger than I would want, and certainly not in lines with their policy of being conservative with overdrafts but I!!!8217;ve accepted anyway as its another plus on my credit file if managed well. Until Monzo get Apple Pay I wont consider them for my primary banking

I do have an overdraft on my main account with B (Yorkshire bank) but just for £250 which is all I asked them for

hangonthebox

davethorp wrote: »

They!!!8217;ve offered me a £750 overdraft. Which in fairness seems larger than I would want, and certainly not in lines with their policy of being conservative with overdrafts but I!!!8217;ve accepted anyway as its another plus on my credit file if managed well. Until Monzo get Apple Pay I wont consider them for my primary banking

I do have an overdraft on my main account with B (Yorkshire bank) but just for £250 which is all I asked them for

Yes, I'm a bit traditional and like having a chequebook (however infrequently i may use them) and paper statements, plus my current account is an offsale one which gives credit interest so I'd be reluctant to give that up. i do have a secondary current account with Starling which I use occasionally, picked over Monzo because of the credit interest plus travel benefits.

maxximus75

They have offered me £750 also. I think the max is £1000?

Not too bad considering I e only put one transaction through Monzo as a test....

takman

hangonthebox wrote: »

Anyone else had an offer through the Monzo app to sign up for an overdraft?

I got a notification through today, inviting me to activate mine. This surprised me as, although I've had Monzo for quite a while (since the prepaid card days) and converted to the current account as soon as I was able, I've only ever used it sparingly, loading the odd fifty bar on and often going months at a time without using it. I've never had an income or any standing orders set up to pay money in regularly.

Anyway, it took me to a screen where I input my annual income and then invited me to choose the amount. This could have been up to £1000 but I chose £500 - and it was activated immediately.

I live within my means, however low or high my income is (and it has periods of being very low!) so it's unlikely I will use this feature but as someone who wants to improve my credit rating, but has no desire for a credit card, I was quite pleased (presuming Monzo report to CRAs, can anyone advise?). I don't have an overdraft on my main (Yorkshire Bank) current account and was actually considering getting a Cashplus card to improve my credit rating so this may be better (and certainly cheaper!) than doing that.

You would be much better getting a credit card, using it and paying it off in full each month. You then also get the benefit of Section 75 protection on purchase over £100. You may even be able to get a cashback one and earn money from it!.

Getting an overdraft isn't going to look particularly good on your credit history and if you use it then it's more likely to look like your overspending and poor at financial management.

maxximus75

The good thing about the Monzo overdraft is that the maximum fee the can charge has a cap of £15.50 per month if you are overdrawn by £20.00 or more otherwise it's free.

Or it's 0.50p per day.

[Deleted User]

I was very surprised to be offered it. I!!!8217;ve had a prepaid card for ages but only used it once or twice. Upgraded because was fed up with them spamming me every other day about upgrading.... thought it may eventually come in useful for something.

Few days later i got an overdraft prompt, so went through it, just asked my income and credit searched, offered £500 max

I was bankrupt a few years ago, and have 15-20k outstandingly debt reported on call credit (but cards always paid in full).

Strangely I also got offered PayPal credit (just £250) from a callcredit search too - both companies are said to be conservative!!

It!!!8217;s expensive mind, unless you get a decent limit. Maxing out 2k at 50p a day is pretty good rate. Believe max is 1k for now though. I!!!8217;m normally about £10 overdrawn just because it!!!8217;s free.

Account conduct not reported to Call Credit yet

maxximus75

The one good thing about it is that it has a maximum fee they charge each month so you know whatever happens..... you won't be charged more than £15.50 each month!

Much more transparent with their charges.

[Deleted User]

I agree it's certainly simple, however ultimately not cheap if you're using it as a "genuine" overdraft (which even they admit on their forum).

Go £19.99 overdrawn for 5 (or even 30!) days before payday and it's no charge
Go £50 overdrawn for 5 days before payday - £2.50 of charges. Go £1000 overdrawn for 5 days before payday - £2.50 of charges.

Clearly the £1000 one is the winner (or £19.99 with no fees!) - but how many people need to go £1,000 overdrawn just before payday and then pay it back in full? I find that somewhat unlikely - or if they do they'll end up being dragged back into the overdraft for say half the next month at -£200, -£300, -£400 etc.

People genuinely using overdrafts are (according to banks) supposed to use them for short term purposes and "dip" in and out. I'd consider a "dip" to be maybe a few hundred, subject to earnings.

APR then is pretty high - however, like Payday loans, APR can't solely be used.

For some people it may well be cheaper than their bank - especially if you have a clear "exit" plan (savings, investments, bonus etc) but like everything, I really hope people fully compare. I know a few people that were hit with Santanders £1 a day as they thought that was cheap.

It would be interesting to see the utilisation of overdrafts per bank (limits given, average amount used, average days overdraw, fees made etc) - but sadly it's all commerically sensitive!

If they gave me £2k I'd use it for investing until they called it in, but no scope for profit in doing it with £1k

Edit: Just to add - Ultimately I DO think it's a good thing. Good to increase competition, it's good for people to have the "option" (especially those like me that banks won't touch with a barge pole) and for some people it will save them money (e.g. people with Santander could see it as "Half price"!)

davethorp

Somerset_La_La_La wrote: »

Few days later i got an overdraft prompt, so went through it, just asked my income and credit searched, offered £500 max

Strangely I also got offered PayPal credit (just £250) from a callcredit search too - both companies are said to be conservative!!

Paypal credit offered me £1250 around the same time as Monzo offered me £750

AlexFerrari

Well i got immaculate CS and monzo just wont offer me an overdraft or paypal on that matter,no explanation why tho,phone contracts,loans etc all paid in time and full,but some ppl with bankruptcy proceedings managed to get credit on both, PayPal and monzo