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Monzo to charge 19%, 29% or 39% for overdrafts

Monzo will start charging 19%, 29% or 39% for overdrafts (depending on your credit score) rather than the current 50p per day.
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Comments

  • Credit score? ��
  • 18cc
    18cc Posts: 2,120 Forumite
    Yes apparently they are going to use that number that many on here assure us is meaningless...

    https://www.dailymail.co.uk/money/saving/article-7790747/Monzo-hike-overdraft-fees-lower-credit-scores.html
  • I think Monzo are using credit scoring to determine the size of the overdraft. I don't believe they actually use the TransUnion score, just the TransUnion data
    In deciding who's eligible for an overdraft and how big it should be, we take into account internal data as well as information from our credit reference agency TransUnion.

    Source: Monzo
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • 18cc wrote: »
    Yes apparently they are going to use that number that many on here assure us is meaningless...

    https://www.dailymail.co.uk/money/saving/article-7790747/Monzo-hike-overdraft-fees-lower-credit-scores.html

    Except they are not, as they can't see the number generated by the credit reference agencies.

    Monzo are, however, making up their own "score", and using that to determine the rate of their overdrafts.

    I wonder if Monzo will be forthcoming in how they calculate their own "score", and if they will share it with their customers?
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • 18cc wrote: »
    Yes apparently they are going to use that number that many on here assure us is meaningless...

    https://www.dailymail.co.uk/money/saving/article-7790747/Monzo-hike-overdraft-fees-lower-credit-scores.html

    Ah a “tabloid article”.

    The same tabloid that also advises on how one can improve ones credit score to have “any chances” of getting a mortgage and how “falling behind on my utility payments ruined my credit score” articles.

    :beer:
  • d123
    d123 Posts: 8,708 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    !!! wrote: »
    Ah a “tabloid article”.

    The same tabloid that also advises on how one can improve ones credit score to have “any chances” of getting a mortgage and how “falling behind on my utility payments ruined my credit score” articles.

    :beer:

    Probably an unfair criticism this time as Monzo themselves are saying it's to be determined from credit score.
    On 1 April 2020, we’ll start charging everyone with a Monzo overdraft an EAR of 19%, 29% or 39% (variable)

    Your rate will depend on your credit score, and we’ll always tell you the exact rate you’ll pay, and what that means in pounds, before you borrow from us.

    https://monzo.com/blog/2019/12/09/our-overdrafts-are-changing
    ====
  • born_again
    born_again Posts: 18,437 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    HappyHarry wrote: »
    I wonder if Monzo will be forthcoming in how they calculate their own "score", and if they will share it with their customers?

    Not a chance... That is very sensitive customer data :D

    They do need to explain where this "Credit Score" they talk of comes from. I can't believe it is the meaningless figure that these companies quote. As they can all be different.:rotfl:

    I wonder how long someone complains on the grounds of "Treating Customers Fairly"
    Life in the slow lane
  • d123 wrote: »
    Probably an unfair criticism this time as Monzo themselves are saying it's to be determined from credit score.



    https://monzo.com/blog/2019/12/09/our-overdrafts-are-changing

    One would assume (hope) they’re referring to their own internal scoring methods.
  • 18cc
    18cc Posts: 2,120 Forumite
    Although I don't know I doubt that they would have enough data really to use their own internal scoring methods they would almost certainly be using a credit agency
  • jonnygee2
    jonnygee2 Posts: 2,086 Forumite
    1,000 Posts Second Anniversary Name Dropper Combo Breaker
    Except they are not, as they can't see the number generated by the credit reference agencies.

    Actually, Transunion do report an overall score to lenders as well as the raw data behind the score. Which theoretically could be used as part of making credit decisions. Larger banks have their own internal scoring methods but it's not unlikely that smaller places like Monzo just use the calculated score.
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