MoneyLion Offers a New Style of Financial Management
A new financial services company called MoneyLion has launched, and it is trying to revolutionize the way people manage credit, make investments, and take out loans.
There are two account options available at MoneyLion: the regular account, which is free; and MoneyLion Plus, which costs $29 per month. In return for the monthly membership fee, Plus members are able to take out personal loans at a reduced interest rate. Payments are reported to the three major credit bureaus, and this would be a good chance for young borrowers to build a credit history.
If $29 per month is too much for your taste, MoneyLion has a program that will circumvent the charge. Every day you login to the mobile app, the company will credit your account $1. If you do this every day during the month, the $29 charge has been eliminated. Sometimes MoneyLion offers cash bonuses for signing up for a Plus account, so keep an eye out for this if you’re considering opening an account.
A Plus relationship requires a monthly deposit of $50 to an investment account, which is the only account type available right now. The company has plans for adding checking and savings accounts in the near future. The investment account consists of low-cost ETF’s from Vanguard. More than $50 can be invested if you’re so inclined.
Signing up for a free account is quite simple. You just need to enter your name, e-mail address, and a password; and your account is automatically established and you’re logged in.
After logging into the site, I was able to enroll in credit monitoring for free. The service uses TransUnion. When I downloaded the MoneyLion mobile app, I was able to connect my pre-existing external bank accounts and receive personalized alerts on these accounts.
MoneyLion also has a rewards program where members can accumulate points for performing a variety of activities. For example, MoneyLion will automatically credit your account 50 points if you have no insufficient balance fees in a month. I was able to earn 250 points when I logged into the mobile app for the first time.
Points can be redeemed for a wide assortment of rewards. A $25 Amazon gift card can be had for just 2,500 points. Other businesses that have gift cards on the MoneyLion app include Nike, Bloomingdale’s, and GameStop.
The company’s mobile app offers the ability to check your credit score simply by scanning the back of your driver’s license. This presumably entails the transfer of your driver’s license number and potentially other details to MoneyLion. While convenient, I personally don’t like handing over such details to a new company (it was established in 2013). The website requires the last four digits of your Social Security Number and net monthly income for the credit monitoring service.
Another service MoneyLion offers is credit card reviews. These can be found on the website. MoneyLion customers review individual cards on a scale of 1 to 5 stars. There are brief details of the card presented on a profile page, although strangely there isn’t a link to apply for the card.
What I really liked about MoneyLion during my test drive of the service was the website’s dashboard. There is no wait time to login after signing up, nor do you even need to verify your account through e-mail. MoneyLion takes you straight to the dashboard, where lots of helpful links appear. These include blog posts, a running total of rewards points, and the ability to borrow money the same day.
Downsides I saw with MoneyLion were the limited capacity of a free account, the $29 monthly charge for a Plus account, and a current lack of deposit accounts. With low rates on personal loans, MoneyLion will likely attract middle- to lower-income earners, and $29 seems a little steep for them. Logging in every day to reduce the charge is a hassle. Its personal loan is limited to just $500, which is going to be too small for many borrowers.
MoneyLion is an interesting service, but it will need to make some adjustments to build a larger client base.