Digital challenger bank today launched overdrafts as part of the Monzo current account. This is the latest in a number of recent milestones for the UK bank.
Monzo’s current account customers will be able to find out if they are eligible for an overdraft in their app from today as the roll out to over 500,000 customers begins. Since launching an overdraft preview in August 2017, Monzo have tested extensively with a small number of customers to build an overdraft that’s easy to use and simple to understand.
Monzo’s straight forward overdraft fees are set at 50p per day. The maximum customers will ever pay is £15.50. Customers can keep on top of overdrafts and get real-time updates on the fees they have incurred from within the app. To protect customers from unwanted fees, Monzo have set a fee free £20 buffer to allow for delayed transactions that can take customers into overdrafts unexpectedly.
Monzo CEO and Co-founder, Tom Blomfield said: “Offering overdrafts to our customers is a milestone we’re pleased to reach. This wider roll out is another important step towards building a bank account that really works for customers.
We’ve been mindful throughout the development of Overdrafts to make sure they are fair, transparent and really put customers in control of their money. When used responsibly, overdrafts can be a useful tool to manage your money. But for some, living in an overdraft has become the norm , while a raft of hidden fees and charges can push people deeper into debt.
To make sure customers are in control, we send notifications when they’re approaching an overdraft. If a customer chooses to use an overdraft, we charge a simple, flat fee of 50p per day. Otherwise, the account simply shuts off at zero. There are no hidden fees or charges whatsoever.”
The launch of overdrafts is the latest in a recent line of milestones for the UK challenger bank who announced reaching 500,000 current account customers last month. The app-based bank started life as a prepaid card back in 2015, Monzo’s prepaid Beta programme improved based on customer feedback, while it worked to gain its banking licence and the ability to offer current accounts. Monzo’s prepaid Beta programme closed earlier this month as more users upgraded to current accounts. On average Monzo sees 1,400 new customers open a current account each day.
Monzo current accounts are covered by the Financial Services Compensation Scheme (FSCS), meaning up to £85,000 of each customers’ money is protected. Users can make bank transfers, set up Direct Debits and standing orders, and get their salaries paid straight in to Monzo.