The digital bank is turning its gaze towards its latest traditional banking product with a twist: overdrafts.
Announced today, users of Monzo’s current account will be able to find out if they are eligible for an overdraft as the digital bank begins its first credit product roll out. It marks an end to the beta-testing period which began as part of a preview to users in August 2017, where a small number of customers were invited to trial the new overdraft product.
The fees are set at 50p per day, with the maximum customers will ever have to pay being £15.50. Customers can then keep on top of their overdrafts and get real-time updates on their fees from within the app, in a similar style to the familiar notification system for purchases.
Monzo has also set a fee-free £20 buffer on all accounts using its overdrafts, to allow for delayed transactions which can take users into overdrafts unexpectedly. CEO Tom Blomfield says that this is all about making sure “customers are in control”, with no hidden fees or charges at any point in the process.
Today’s announcement follows the closing down of Monzo’s prepaid card product as part of its initial beta programme, as the bank announced it had safely upgraded more than 94 per cent of its active user base onto its current account. On average, Monzo is seeing 1,400 new customers opening a current account each day, which adds up to around 60k new accounts per month.
"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," added Blomfield.
"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."
In a Q&A with Monzo community users last week, Blomfield confirmed that its average customer now sits around the age of 31, interacting with the bank about 650 times a year. Since Monzo’s beginnings in 2015, customers have now spent over £1.4bn on either the prepaid or current account debit cards.