Please note: High-cost short-term credit is unsuitable for sustained borrowing over long periods and would be expensive as a means of longer-term borrowing.
The UK’s payday/short-term loans market is full of lenders with outlandish names (like WizzCash, Mr Lender and Uncle Buck) that essentially offer quite similar services. So is SafetyNet Credit just another of these? Well, not really…
SafetyNet Credit Facility
- SafetyNet Credit uses read-only access to your current account to provide a flexible line of credit.
- Avoid unauthorised overdraft fees by setting account balance triggers.
- Once approved, transfer money into your account within 15 minutes.
Representative example: Borrow £500 at a rate of 0.8% per day for up to 40 days (292% p.a., variable). Representative 68.7% APR variable.
What's in this review?
What is SafetyNet Credit?
If you grant it access to your current account transaction information, SafetyNet Credit will make a secure and ongoing connection to your bank account and use this connection both to assess your credit and to track your balance – lending money when you need it (hence the “safety net”), and taking repayments only when you can afford it.
Because it’s an open-ended and ongoing agreement, this is described as a revolving line of credit.
Underlying this innovative approach, however, is high-cost, short-term credit that’s not dissimilar to typical payday lending – with similar eye-watering interest rates and similar amounts available to borrow.
Features at a glance
|Product Name||SafetyNet Credit Facility|
|Available Amounts||Up to £1,000|
|New customer maximum||£500|
|Soft search eligibility check|
|Funding speed||SafetyNet says initial account approval can take up to 24 hours. If you have been approved and your SafetyNet account has been set up, it usually takes around 15 minutes to receive funds, but can take up to 2 hours.|
|Additional repayment methods||Online payment,Phone payment|
|Repay early at any point|
|Parent company||Indigo Michael Limited|
|FCA registration number||792605|
|Link||Go to site|
How does it work?
When you apply for a credit facility through SafetyNet Credit, along with all the usual info you’d expect to be asked for, you’ll be asked to give the company access to your bank account. That doesn’t mean handing over your internet banking log-in details. Instead, it uses open banking to access and analyse your account transaction data.
SafetyNet Credit will use this visibility of your account, together with your credit history, to assess whether short-term credit would be affordable for you. Provided it is, SafetyNet Credit will then make a certain amount of credit available to you, which you can use at any time. You’ll probably want to download the app to make this process easier, but alternatively you can log into your dashboard online. While you’re borrowing, you’ll pay a daily charge of 0.8% (that’s 80p per £100 per day).
Having that live connection to your bank account also means that you can set up automatic borrowing for when your linked account drops to a pre-agreed level. The purpose of this is to avoid going into unauthorised overdraft (exceeding your authorised overdraft limit) and incurring those harsh penalty fees. You’ll want to look at your account’s overdraft rates and fees to weigh up the overdraft costs vs using SafetyNet Credit, and the point at which to set the pre-agreed level for automatic deposits.
Repayments can be made manually at any time, or will be taken automatically when money comes into your account.
Can SafetyNet Credit affect my credit score?
Like the vast majority of lenders, SafetyNet Credit reports details of your repayments to credit reference agencies (CRAs). Provided you make all repayments in full and on time, using credit responsibly helps to build a positive credit history. By contrast, if you miss repayments, then that’s also reported back, and will have a negative impact on your credit record.
SafetyNet Credit will run a check of your credit record as part of the application process. This check will leave a footprint, and will also cause a slight (and usually short-lived) negative effect on your credit score, so you shouldn’t apply for too many loans in a short space of time.
You can apply for a SafetyNet account if you have bad credit (your application will stand a better chance of approval if negative marks on your credit file are not recent).
Is SafetyNet Credit safe and legitimate?
OK… this could get a bit dry.
SafetyNet Credit is regulated and authorised by the Financial Conduct Authority (FCA), so it’s bound by the same rules and regulations as pretty much all reputable lenders in the UK (never borrow from a company that isn’t FCA-regulated and authorised – if in doubt, you can search its register).
If you’re alarmed by the idea of giving a lender visibility of your transaction history, that’s a perfectly reasonable response. But it’s worth appreciating that you’re giving SafetyNet Credit “read-only” access, and SafetyNet Credit isn’t breaking any laws in doing this.
Until recently, SafetyNet Credit would ask applicants to hand over their internet banking logins to allow it to “scrape” transaction information, with the help of a third party company called Yodlee. Again, this wasn’t illegal, but it was questionable in that your bank probably wouldn’t approve of you sharing your login details.
However, in 2019 Safety Net made the leap to open banking – which is arguably a much more legitimate approach.
Open Banking is a government-led initiative that the banks have had to get on board with due to requirements issued by the Competition and Markets Authority (CMA). Open Banking boils down to banks having to be ready to share a customer’s transaction data with authorised third parties if the customer instructs them to do so. And “authorised third parties” means companies that are on the Open Banking Directory – and regulated by the FCA or a European equivalent.
Crucially though, the fact that SafetyNet Credit is safe is one thing, whether or not it’s a cost-effective choice is another – you should always shop around to get the best rate on a loan. Similarly if you’ve already signed up for a credit facility from SafetyNet Credit, you can terminate it at anytime and seek better rates elsewhere.
Pros and cons of borrowing with SafetyNet Credit
- Speed. It can take up to a day for new customers to get the credit facility set up, but once it’s in place, it’s very quick (even automatic) to access credit from then on.
- Convenience. Once the credit facility is in place, you can use the online dashboard or app to request credit whenever you need it, or set up automatic deposits when you’re nearing the limit on your authorised overdraft.
- No fees. Provided you make repayments on time, then there are no costs other than the interest.
- High rates. At 0.8% per day, this credit is sitting right on the legal maximum, and should only be considered as a last resort. You should look for a better overdraft facility first, and ask yourself if the spending is absolutely essential.
- Privacy. Some people may be uncomfortable with the idea of sharing visibility of their transaction history.
- Too convenient? Could this service’s convenience also be its downfall? If you forget that you’ve set up automatic deposits, you could effectively end up taking out a loan without meaning to. And for some people, the ease of securing credit could make it harder to resist frivolous spending.
How do I apply?
It’s straightforward to apply online, and for new customers it can take about a day to set up the facility.
To apply to SafetyNet Credit you’ll need to meet the following criteria:
|Additional eligibility notes||You must have a salary or other regular income.|
You must have a current account with internet banking.
|Link||Go to site|
You’ll need to provide you bank account sort code and account number, and then you’ll need to authorise SafetyNet Credit from your internet banking.
Early repayment options
|Repay early at any point|
|Repaying early can reduce overall interest|
|Phone number||0800 180 8400|
|Link||Go to site|
The bottom line
SafetyNet Credit has done an impressive job of making it super-convenient and easy to regularly dip into its credit facility. The only problem? High-cost short term credit isn’t suitable for regular use. If you’re frequently dipping into unauthorised overdraft, this facility could save you money, but you should look at your other options too.
Frequently asked questions
Read more on this topic
Loans like SafetyNet Credit
SafetyNet Credit provides short-term loans of up to £500 designed to prevent borrowers being hit by unauthorised overdraft fees.