BACS Transfers

Caped_Avenger · 17 November 2005 at 5:23PM

Right, that's the thread re-constructed. We're open to the floor. If anyone's interested...

If a BACS transfer is sent on a Monday (not just set up on a Monday, because if it's past Monday's cutoff, it will not be sent until Tuesday), it will arrive with the destination bank on Wednesday. I class Monday as Working Day 1, Tuesday as WD2, and Wednesday as WD3, so i say that is 3 working days. I can understand why you would class that as 2 days, of course. It's just semantics really.

Either way, as i understand it, it's entirely down to the receiving bank. The paying bank chooses the day the funds are sent, and that's their involvement over. Let's say (hypothetically, based on a bank that i bank with, and understand very well) i call first direct next Monday (for ease) to transfer £100 to my father's Lloyds TSB account.

I call fd at midday. They have an 8pm cut-off for sending BACS transfers, so if i had called after 8pm, it wouldn't be sent until Tuesday. As i say though, i'm going to call at midday. For simplicity, we'll assume i give the Customer Service rep the correct account number, sort code, account name, and i've got well over £100 cleared funds in my account.

Day 1) The £100 debits my account at midday (immediately i request the transfer), the £100 goes to an fd suspense account, and is held there overnight.

Day 2) Is the day the funds are actually with BACS. Lloyds TSB can see that there is due to be £100 sent to my father's account the next day.

Day 3) The funds arrive with Lloyds TSB. This is when the discrepency can occur. Lloyds TSB apply the funds immediately, in all of my experience of them. Some banks hold on to the funds for an extra day before applying them to the actual destination account. This is most evident when Credit Card providers tell you to send payments 4 working days in advance (using my terminology, that is) i.e. to send a payment on Monday if it is due the following Thursday. The same is the case with some building societies. Some Credit Card providers tell you to allow 4/5/6/10 working days for some payments! :eek:

Dagobert · 17 November 2005 at 7:32PM

Thank you for your explanations of the clearing cycle.

Caped_Avenger wrote:

Either way, as I understand it, it's entirely down to the receiving bank.

Strangely, this does not tally with my experience or how do you explain the following?

I keep a tally of how long transfers between my bank accounts take. The following is an excerpt of my list sorted by the receiving bank. If the receiving bank determines the transfer time through holding on to the money for x extra days, then any transfer from any bank to a particular bank should take the same number of days, shouldn't it?

From To Days
AA BoS 2
A&L BoS 3
Egg BoS 2
FirstDirect BoS 2

BoS ICICI 3
Cahoot ICICI 4
Halifax ICICI 3

Dagobert · 17 November 2005 at 7:37PM

I found the following articles quite interesting: The clearing Cycle and Get your clearing house in order.

Caped_Avenger · 17 November 2005 at 8:24PM

Yeah, it seems you're right, some banks who send money must hold on to it for an extra day before releasing to BACS. Based on the evidence you've presented me with, i've come to the following conclusions:

1) AA, Egg & fd --> BoS stand up to the "normal" timescale, what you call 2 days.

2) ICICI seem to hold on to the funds for an extra day before crediting the beneficiary, hence BoS & Halifax --> ICICI being 3 days.

3) Cahoot and A&L hold on to the funds in their suspense account longer than most banks, hence they earn an extra day interest on every single transfer they send. This is verified by what you sent in the PM.

Cahoot sa Egg cc 3
Cahoot sa Derbyshire rs 3
Cahoot sa ICICI sa 4

Alliance & Leicester ca Alliance & Leicester sa 3
Alliance & Leicester ca BoS ca 3

The thing that scares me most about that is that A&L allowed a transfer from a current to a savings account to go externally, via BACS! :eek:

Dagobert · 17 November 2005 at 9:59PM

This is beginning to be an interesting exercise!

Caped_Avenger wrote:

some banks who send money must hold on to it for an extra day before releasing to BACS.

...

3) Cahoot and A&L hold on to the funds in their suspense account longer than most banks, hence they earn an extra day interest on every single transfer they send. This is verified by what you sent in the PM.
The thing that scares me most about that is that A&L allowed a transfer from a current to a savings account to go externally, via BACS! :eek:

I can back up your theory about cahoot as the sending bank holding on to the money for an extra day:

From To Days
Cahoot Derbyshire 3
Cahoot Egg 3
Cahoot ICICI 4

I wonder whether Abbey (cahoot is a division of Abbey National plc) employs the same tactics. I am curious to see how many days transfers between FD and HSBC, or between cahoot and Abbey take!

We could further complicate this research by making notes which banks pay interest on the day of receipt and withdrawal - necessary if one wanted to compute the days of lost interest.

Caped_Avenger wrote:

The thing that scares me most about that is that A&L allowed a transfer from a current to a savings account to go externally, via BACS!

I have a few current accounts (for more flexibility in transferring savings). All online interfaces except A&L's distinguish between internal and BACS transfers. The internal transfers are applied with immediate effect, no interest lost.

Caped_Avenger · 17 November 2005 at 10:02PM

Dagobert wrote:

...I am curious to see how many days transfers between FD and HSBC, or between cahoot and Abbey take!...

Well, i know that fd to HSBC personal account transfers are instant. However, fd to HSBC business account transfers can take the same period of time as a BACS. Please don't aske me why!

This of course throws up the question of whether HSBC personal to HSBC business accounts is instant or whether it is similar to BACS. If that is the case, what about all other banks transferring from personal to business accounts, and vice versa?

Dagobert wrote:

This is beginning to be an interesting exercise!
...
We could further complicate this research by making notes which banks pay interest on the day of receipt and withdrawal - necessary if one wanted to compute the days of lost interest.

Interesting indeed! It would take a hell of a lot of research. Plus at least one person who was willing to help who banks with each of the banks.

Dagobert · 21 November 2005 at 4:33PM

Caped Avenger, do you know, for the purposes of BACS transfers, which days count as working days during the Christmas/Hogmanay period 2005/06? North of the wall, people are in a coma till 3rd January but what about the banks?

Caped_Avenger · 21 November 2005 at 5:28PM

The following are the days around the Christmas period. If a day is in bold then that day is non-working. Otherwise, BACS will process on that day. Basically, BACS works to English bank holidays, not Scottish ones.

23/12/05 Fri
24/12/05 Sat
25/12/05 Sun
26/12/05 Mon
27/12/05 Tue
28/12/05 Wed
29/12/05 Thu
30/12/05 Fri
31/12/05 Sat
01/01/06 Sun
02/01/06 Mon
03/01/06 Tue

ACID · 21 November 2005 at 5:51PM

Thanks For The Usefull Info

MarkyMarkD · 21 November 2005 at 9:50PM

Caped_Avenger wrote:

Cahoot and A&L hold on to the funds in their suspense account longer than most banks, hence they earn an extra day interest on every single transfer they send. This is verified by what you sent in the PM.
The thing that scares me most about that is that A&L allowed a transfer from a current to a savings account to go externally, via BACS! :eek:

I don't think A&L, specifically, DO "hold the money in a suspense account for an extra day" and hence "earn an extra day's interest". I think they actually just take the instruction for the BACS payment on day 1, but actually start the 3 days process (using your terminology) on day 2. So it takes a day longer for the money to arrive, but there's no more lost interest.

If you transfer from an A&L current account to any linked A&L savings account, it is same-day value - I've never experienced a 3 day delay as Dagobert has. If you set up a BACS transfer to an A&L savings account from your A&L current account yourself, rather than using the "proper" inter-account transfer functionality, though, I can see how it would happen - A&L presumably don't check the sort codes of BACS transfers that are set up to see if they are other A&L accounts. I have asked in the past why they don't provide a facility to make transfers to other A&L accounts by entering the A&L account number (with no need for sort code etc., and same day value) and they haven't answered that to my satisfaction although IIRC they may have said that it may be implemented in future.

Dagobert · 21 November 2005 at 10:35PM

MarkyMarkD wrote:

I don't think A&L, specifically, DO "hold the money in a suspense account for an extra day" and hence "earn an extra day's interest". I think they actually just take the instruction for the BACS payment on day 1, but actually start the 3 days process (using your terminology) on day 2. So it takes a day longer for the money to arrive, but there's no more lost interest.

My above transfer time charts count the number of working days between the day the money leaves account A and the day it arrives in account B taking the dates from the respective bank statements. To determine how much interest is actually lost, one would need to take into consideration whether the participating banks pay interest on the day of withdrawal and/or receipt.

A&L -> BoS example
The transfer was scheduled for Tuesday 8th Nov. On the A&L statement, the transfer is dated 8th Nov. The amount was received in my BoS a/c on 11th Nov.

The A&L current account T&Cs, paragraph 8, state that in the case of electronic transfers, interest is paid from the day after receipt. They do not state whether they pay interest on the date of withdrawal. I suspect though that they do because in my experience banks either pay interest

from and including day of receipt and excluding the day of withdrawal or
from and excluding day of receipt and including the day of withdrawal

Likewise, Cahoot pay interest from the next working day after receipt. Again, I presume that they pay interest on the day of withdrawal.

Maybe we can conclude from this small sample that banks which pay interest on the day of withdrawal action a BACS transfer on the next working day?

MarkyMarkD wrote:

If you transfer from an A&L current account to any linked A&L savings account, it is same-day value - I've never experienced a 3 day delay as Dagobert has. If you set up a BACS transfer to an A&L savings account from your A&L current account yourself, rather than using the "proper" inter-account transfer functionality, ...

Indeed, my online savings account is not linked to my A&L current account.
Various other banks' online interfaces automatically link all internal bank accounts: Norwich & Peterborough, FirstDirect, Bank of Scotland/Halifax, Cahoot. I suppose, I just expected A&L to operate in the same manner.

Could you, please, explain how to use A&L's inter-account transfer functionality properly?

BACS Transfers

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