In a blog post from Monzo co-founder Tom Blomfield, the challenger bank said that existing users would be able to find out if they’re eligible for an overdraft in their app from 12 April 2018.
Similar to users’ existing accounts, Monzo has claimed its overdraft facilities will be more transparent for customers than those of high street banks. Through the challenger’s app, users will be able to get updates on fees and keep track of their overdrafts in real-time.
Fees will be set at 50p a day, and the firm insisted its customers would only ever pay a maximum of £15.50. A £20 “buffer” has also been set, so that when an offline payment transaction goes through and takes users into their overdraft, that user won’t be charged up to -£20.
The blog post read: “Back in January, we said we’d work to give more people the option to use an overdraft. We haven’t been able to make them available as widely as we’d hoped yet. But today, we’re ready to start offering overdrafts to more of you.
The bank clarified that not all its users would be eligible for an overdraft, and that there could be a host of reasons related to ineligibility, such as a poor credit rating, previous bankruptcy, or the length of time a user had been a Monzo customer. “If you aren’t eligible, we’ll let you know why in the app,” confirmed the challenger.
The announcement comes one week after the bank revealed that the vast majority of its customers, including 94 per cent of its active users, had upgraded their account to Monzo’s current account service.
In the blog post, Blomfield went on to say: “If you ever find yourself in a situation where you can’t repay, we’ll always take into account your circumstances and agree on an appropriate arrangement together. If you’re struggling with your finances or have other debts, we’ll refer you to free and independent sources of advice.”
Set up in 2012, Monzo has grown rapidly to become the largest digital challenger bank in the UK, boasting more users and greater amounts of finance raised than rival firms like Atom Bank or Starling.