Arranged overdrafts can be ideal if you need to borrow a little extra money to tide you over every now and then.
From April 2020 our overdraft pricing model is changing because of new regulation that makes it easier to compare rates between banks. Right now we charge a flat 50p a day rate.
Between now and April 2020 we’re moving everyone over to a personalised interest rate based on your credit score, and making a few other changes.
Overdrafts are designed for short term borrowing, and they’ll cost you less if you pay them back quickly.
Monzo overdrafts at the moment
Fixed daily fee
We’ll charge you 50p every day your account is overdrawn by more than £20, up to a maximum of £15.50 a month. No other fees, that’s it.
So, as a representative example, if you had an arranged overdraft of £1,000 we’d charge you 50p every day you use it, no matter how far into it you are.
Limits of up to £1,000
If you’re eligible, you could get up to £1,000.
You can change your limit or turn off your overdraft any time.
A free £20 buffer
Everyone has a £20 buffer built into their account to cover you if you go a few pounds overdrawn. We won’t charge you for using it, and if you go more than £20 overdrawn we’ll let you know and give you until midnight to add money and avoid charges.
Monzo overdrafts from April 2020
We've updated the way we price our overdrafts from a fixed daily fee to an interest based charge.
From 1 April 2020 everyone with a Monzo overdraft will have this pricing. From December 2019 we will be giving existing and new users the option to move to this overdraft.
19%, 29% or 39% EAR (variable)
As a representative example, if you use an arranged overdraft of £1,200 for 30 days, with 19% EAR/APR (variable), it would cost you £17.28. Your exact rate will depend on your credit score, and you can see what rate you’re on in your Monzo app.
We’ll always tell you the exact rate you’ll pay, and what that means in pounds, before you borrow from us.
Limits of up to £3,000
If you’re eligible you could have an overdraft limit up to £3,000. As always, this won’t apply to everyone and we’re very careful about only giving people what we’re confident they can safely afford to borrow.
You can change your limit and cancel your overdraft at any time from your app. If you want to to do so you’ll need to pay the amount you borrowed back, plus any interest.
No extra fees
From April 2020, we won’t have a £20 fee free buffer, but we won’t charge you any extra fees for going into your overdraft, and we’ll always tell you when you go into it.
What are EAR and APR?
EAR stands for effective annual rate.
This is equivalent to the rate of interest you'll pay if you're overdrawn for a year. You'll pay interest on the amount you're overdrawn by, and on the interest that builds up from being overdrawn. So you'll pay less if you regularly pay off your overdraft. EAR doesn’t include other fees, like hidden or late fees – but we don’t charge these anyway.
APR stands for annual percentage rate.
It is calculated in the same way as the EAR plus any additional fees (like hidden or late fees) but we don’t charge these anyway so our EAR and APR are the same.
Variable means we have the right to change the rate, but we’ll always give you notice if we do.
You can use the calculator below to figure out how much you would pay depending on your personal rate.
When you switch on an overdraft with Monzo that's called an arranged overdraft. If you go over your arranged overdraft limit or you don't have an arranged overdraft we'll reject payments (for free), but there are some times when we can't reject payments. We've explained how it works below:
If you go over your agreed overdraft limit
We’ll reject any payments that take you over your limit, and you won’t be able to take cash out. The only exceptions are ‘offline’ payments, like those you make to TfL. We can’t reject these, so you’ll go into an unarranged overdraft, but we'll tell you as soon as this happens. You'll have until midnight to add money to your account, so you can avoid charges or any impact on your credit score (which might make it harder for you to borrow in the future).
If you go into an unarranged overdraft we’ll charge you the same rate we would if you were using your arranged overdraft, and we will cap the charges at £15.50 per month, so you will never pay more than that.
If you don’t have an arranged overdraft
If your account is empty, we’ll reject payments unless they’re payments as described above. Starting in April we’ll charge you 39% EAR (variable) if you go overdrawn, and we’ll cap these charges at £15.50 per month, so you’ll never pay more than that.
Check if you're eligible for an overdraft
You can use this eligibility checker to see if you’re likely to get an overdraft with us. Please note a few things:
- Using this checker doesn’t guarantee you’ll get an overdraft with us
- The outcome is based solely on the accuracy on the information you give us
- Using the checker won't affect your credit file in any way
- Any overdraft offered by Monzo will depend on a full eligibilty assessment (this will happen when you apply for an overdraft in our app)
Remember: these results are not definite, this is just a guide