UK challenger bank Monzo has launched overdrafts, a week after announcing that the vast majority of customers upgraded to current accounts.
The company, co-founded by Tom Blomfield, said in a statement that users would be able to find out if they are eligible for an overdraft in their app from today.
Monzo has made a name for itself by arguing that it is more transparent than its incumbents, and says its overdraft fees will be set at 50p per day. Additionally, the FinTech firm has said customers would only ever pay a maximum of £15.50.
Customers will be able to keep an eye on their overdrafts and get real-time updates on the fees incurred from within the app.
Monzo has also set a fee free £20 buffer to allow for delayed transactions in an attempt to protect customers from unwanted fees.
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.
Meet WeWork Labs: the accelerator-focused startup community
“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 news comes after Monzo announced it had reached 500,000 current account customers last month.
Backed to the tune of £109m, Monzo has raised from investors including Passion and Thrive Capital.