Monzo has launched a deposit-backed credit card pilot with Fair4All Finance to help UK adults with poor credit scores access affordable borrowing.
The initiative uses a deposit-backed mechanism designed to give those with low credit scores a structured pathway to build repayment history and, over time, access higher credit limits.
An estimated 16 million UK adults are affected by limited access to affordable credit. The pilot sits within Monzo's existing credit framework: customers who are ineligible for the standard Flex credit card are directed to Flex Build, where the new deposit-backed facility is available.
How the deposit model works
According to the announcement, eligible customers place a small deposit into a designated account, which serves as a signal of intent to borrow and repay. Depending on the amount deposited, customers can access borrowing of up to GBP 250. The deposit itself accrues interest at 2.75%, in line with Monzo's standard savings rate.
The product is not intended as a route to increased spending capacity. Its core purpose is credit-building: borrowing modest amounts and repaying them consistently can improve a customer's credit file, eventually enabling progression to a GBP 500 limit and, in time, to the main Flex credit line.
Several features are built in to limit the risk of financial harm. The app displays projected interest across different repayment periods, and customers who miss a payment have a seven-day window to catch up, using their deposit if necessary. Additional spending is suspended during that window until the deposit is restored.
Fair4All Finance is providing a partial lending guarantee for the scheme. The company described the pilot as an important moment for financial inclusion in the UK, noting that the guarantee structure enables the product to scale to thousands more customers who are currently excluded from affordable credit.
Financial inclusion in focus
The pilot reflects a broader challenge in UK consumer credit. Individuals with thin or damaged credit files frequently find themselves locked out of mainstream lending products, with limited options that do not compound their financial vulnerability. Moreover, deposit-backed credit facilities represent one model for bridging this gap, allowing lenders to manage risk while offering customers a functional credit-building tool.
Monzo's approach integrates the product into an existing customer journey (routing ineligible Flex applicants directly to Flex Build) which may support uptake without requiring separate acquisition efforts. The partnership with Fair4All Finance, a non-profit backed by government funding, also provides a reputational and structural underpinning that distinguishes this from a conventional subprime credit offering.
External commentary from debt advice organisations has noted that customers with existing financial difficulties should exercise caution before taking on additional credit, and that early engagement with free debt advice services remains advisable for those in difficulty.
