Banks And Overdrafts Fees

[Bingo]

Check this out;

http://www.chron.com/disp/story.mpl/headline/biz/7149795.html

I have often wondered why, when I pay my monthly DD's they appear to leave my account right before money enters my account. Sometimes the DD goes out 1, 2 or even 3 days before schedule? While money transferring into my account seems to take forever (or at least until after my DD's have gone out) Causing me to get hit by the bank for 8 quid charges. Is it possible this is manipulation, I think there is a lot of money involved...

Maybe if there is a banker on the forum who could enlighten me?

[Saving For a Space Ship]

The meat from your linked article, I assume., .

The crux of the claims is that the banks processed debit transactions from the largest to the smallest, instead of the order in which they occurred, depleting accounts faster and boosting the number of overdrafts, which cost as much as $35 per transaction.

and does it goe on in Uk ? Presumably Uk banks in the Us are affected in the court case, though they are not mentioned in the article

Edited August 13, 2010 by Saving For a Space Ship

[Bingo]

The meat from your linked article, I assume., .

and does it goe on in Uk ? Presumably Uk banks in the Us are affected in the court case, though they are not mentioned in the article

I would guess the UK banks will be implicated, they never miss a trick when it comes to taking money off me. Could it be the case here? They are so deep into the governments pockets, the case would never be brought...

[deflation]

Maybe the rules are different in the USA, but in the UK, if a D/D date falls on a w/end or a bank holiday, it is taken on the next working day.

Some months, payments from my a/c due out on the 1st don't leave til the 4th. Perhaps 'over there,' they were taking it early instead?

[Bingo]

Maybe the rules are different in the USA, but in the UK, if a D/D date falls on a w/end or a bank holiday, it is taken on the next working day.

Some months, payments from my a/c due out on the 1st don't leave til the 4th. Perhaps 'over there,' they were taking it early instead?

this certainly isn't the case with Barclays, if the D/D payment date falls on bank holiday Monday, the payment comes off on the Friday before. It appears to be the same with weekends also... Of course credits to the account don't come in early because of a bank holiday.... Et voila!!!

[copydude]

In Holland, if a debit falls into your Girobank when there are no funds, it simply isn't paid.

It simply isn't paid by my Santander bank here either, but yes there is a £30 charge.

How does your bank describe this charge? On a Santander account, it says: 'Instant Overdraft Request Fee'.

Now, I didn't request an overdraft, instantly or otherwise. I am quite happy for it not to be paid, as happens in Holland.

And shouldn't the wording be, 'Instant Overdraft Request Rejection Fee' ??

[deflation]

this certainly isn't the case with Barclays, if the D/D payment date falls on bank holiday Monday, the payment comes off on the Friday before. It appears to be the same with weekends also... Of course credits to the account don't come in early because of a bank holiday.... Et voila!!!

That surprises me. I would have though that the general T&C of bank accounts in the UK would be standard. I was with Lloyds for 20 years and Halifax for the last 12 months and yes, there have been c**k-ups but a d/d has NEVER been taken early.

Is it a business a/c? Maybe the rules are different.

To 'copydude,' most UK a/c have overdraft facilities to prevent the bouncing of d/d and cheques. You just pay for it later if it wasn't authorised! It seems you don't have an allowed overdraft facility at all.

Edited August 13, 2010 by deflation

[poppyoscoe]

I have never had DDs taken before their scheduled date (after due to bank holiday and weekends but not before) however my bank (Nationwide) update my account (Flexaccount) overnight which they do in a set transaction order and all payments are taken prior to credits being posted.

We found this out to our cost having taken the current account down to near zilch one month and 5 x DDs due same day as hubby's salary paid in - resulting in 5 bounced DDs and therefore 5 bounced DD fees and 5 unpaid people to deal with - complained to branch who explained the overnight allocation process/order and told us we had no grounds for complaint as in the account small print it states that cleared funds needed to be available the working day before DDs due - we thought we were covered as payments and salary all due same day.

This must make the bank a fortune and is obviously a good money spinner - if they were there for the customers benefit they would allocate credits before debits in the overnight update! If all banks follow this method of updating accounts ...........

Edited August 13, 2010 by poppyoscoe

[samwise]

Remember, remember - a direct debit is an agreement between yourself and the originator.

As such, the originator makes a claim for payment through the BACS system, and providing the direct debit mandate exists on the account in question, the bank will pay it, return it, whatever needs to happen. The bank has no knowledge of the agreed upon date or amount of each payment.

Any changes to the agreed upon amount or date by the originator are supposed to be informed to the customer with x number of days notice (can't remember the actual number of days now).

In theory, direct debits are deducted from the account first thing in the morning (ie, maybe 2am) as it is done by computer, so you should always aim to have sufficient funds in the account by at least the day prior to the due date.

[ChumpusRex]

Any changes to the agreed upon amount or date by the originator are supposed to be informed to the customer with x number of days notice (can't remember the actual number of days now).

In theory, direct debits are deducted from the account first thing in the morning (ie, maybe 2am) as it is done by computer, so you should always aim to have sufficient funds in the account by at least the day prior to the due date.

It's 28 days written notice for a direct debit, for any change in amount or date (unless the direct debit is set up in such a way as to permit variable amounts).

Direct debits, like standing orders and BACS payments are processed offline by computer at BACS. The banks send a list of transactions to BACS on day 1. BACS pools the transactions and works out which ones go through, and which ones bounce. This system is specifically designed so that the maximum possible number of transactions go through without overdrafts; the computer chooses the optimal order of transactions in order to avoid going overdrawn. The results of which transactions could be made and which couldn't are then sent back to the banks the following working day, where the funds are then shuffled amongst individual customers accounts. As the transactions are batched, they all appear to go through simultaneously some time in the early hours.

This offline processing historically took 3 days. Day 1 for the banks to compile the data and prepare it for dispatch. Day 2 data arrives at BACS for processing. Data is processed and repacakged for dispatch to banks. Day 3 data arrives at banks, ready to be merged into their computer databases.

Instant payments, which the banks are now pushing for, don't have this automatic optimisation feature, so theoretically at any rate, you are more likely to go overdrawn briefly, if the transactions go through at different times.

[Tiger Woods?]

I have never had DDs taken before their scheduled date (after due to bank holiday and weekends but not before) however my bank (Nationwide) update my account (Flexaccount) overnight which they do in a set transaction order and all payments are taken prior to credits being posted.

We found this out to our cost having taken the current account down to near zilch one month and 5 x DDs due same day as hubby's salary paid in - resulting in 5 bounced DDs and therefore 5 bounced DD fees and 5 unpaid people to deal with - complained to branch who explained the overnight allocation process/order and told us we had no grounds for complaint as in the account small print it states that cleared funds needed to be available the working day before DDs due - we thought we were covered as payments and salary all due same day.

This must make the bank a fortune and is obviously a good money spinner - if they were there for the customers benefit they would allocate credits before debits in the overnight update! If all banks follow this method of updating accounts ...........

When I worked for a company, I always, if possible, ensured my DDs come out a few dayds after "pay day". Just too risky otherwise for you to be hit with charges because accounts don't get your pay out on time etc., let alone any bank jiggery pokery.