Digital bank Monzo has announced that it will make it more costly for people with low credit scores to pay for their overdraft.
The news comes after the Financial Conduct Authority, the UK financial watchdog, ordered Monzo to introduce fairer fees that were fairer and easier to compare, This is Money reported.
Monzo’s latest move will see it ditch its 50p daily charge for overdrafts to the benefit of the new sliding scale that will see customers pay differently depending on their overdrafts.
Monzo introduced three different brackets where customers pay annual equivalent rates of either 19%, 29% and 39%.
The digital bank has reportedly notified its customers via email.
The news came weeks after Royal Bank of Scotland (RBS) released its own digital banking app – Bó. Launched at the tail end of November, Bó has been seen as the bank’s answer to challenger banks like Monzo, which RBS was in talks of buying for a while.
However, the launch of Bó has been tainted by accusations that many of the five-star reviews posted about the app were written by RBS employees.
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