Monzo Introduces Automated Debt Consolidation Service with ClearScore Tech

Digital bank Monzo has launched an automated debt consolidation service, streamlining the process of paying off existing debts for its customers. The new offering is made possible through a partnership with credit score provider ClearScore, which brings its Clearer technology to bear on the task.

The service works by bringing together all of a customer’s borrowing into a single loan, and then automatically finding and settling their outstanding debt directly with lenders. This means that customers no longer need to contact lenders or check balances themselves, freeing up time and reducing stress.

According to Monzo Head of Borrowing Luke Enock, the new service is designed to make it easier for customers to manage their finances and get on top of their debts. ‘For customers, this means less admin and confidence that the loan is being used to pay down what they already owe,’ he explained in a LinkedIn post.

The automated debt consolidation experience requires a Monzo current account, and is available to UK residents aged 18 and over who meet certain eligibility criteria. The service also comes with its own set of terms and conditions, which customers will need to review before applying.

Monzo’s representative APR for loans up to £10,000 is 21.8%, while the rate drops to 10.2% for loans between £10,001 and £35,000. These rates are in line with industry standards, but may vary depending on individual circumstances.

The partnership with ClearScore marks a significant development in Monzo’s mission to make money work for everyone. ‘This is another example of our commitment to using technology to simplify financial services and improve people’s lives,’ Enock said.

Clearer, the automated debt repayment technology developed by ClearScore, ensures that when a customer takes out a consolidation loan, their existing debts are automatically paid off rather than being used for other purposes. This reduces the risk of default and makes it easier for lenders to assess creditworthiness.

The new service is part of Monzo’s ongoing efforts to expand its offerings and attract new customers. The bank has recently increased spending on its ‘refer a friend’ program, which saw payouts rise by almost 40% in the year leading up to March.