Monzo has launched a £3,000 buy now, pay later loan service.
While the service will not charge interest to customers who repay their loan over 3 months, those that opt to pay back over a -12 month period will be charged 19% annual interest.
Minck Hermans, Co-founder and CEO at borofree commented: ‘It’s troubling to see that Monzo is able to introduce this new offering to its young customer base, with credit allowed up to £3,000.
“It’s irresponsible to loan this amount of money to people as it could leave them saddled with long-term high interest debt that is extremely difficult to pay off over time. Too many of us can find ourselves sleep-walking into debt, whether it’s through the lure of interest-free credit card offers or seemingly risk-free ways to buy like Buy Now, Pay Later, seducing us to spend money we don’t have on things we don’t really need.
“To help hardworking people if money is tight in the short term and so that they don’t turn to these services that could cause them to wind up in debt, borofree’s salary advance scheme allows users to only take a portion of their wages before their payday to help them if they are caught short for those all-important essentials. With the aim to smooth earnings, salary advance is unlike payday loan or buy now, pay later lending and instead it shakes up the traditional system of being paid monthly to allow users to access emergency cash. At borofree we only ever give a customer access to £300 of their salary, without interest, charges or fees’.