How do banks prioritise payments

TeePee321 · 28 November 2012 at 3:08PM

Nearly all my standing orders and direct debits come out on the 1st of the month.

I do not have enough funds in my account to pay them all this month.

I want to make sure the important ones are covered, which include 2 standing orders.

Will the bank prioritise them over direct debits? Or should I cancel some direct debits to be on the safe side?
I was hoping they will all just be honoured and I would deal with the charges next month. But I cannot risk my mortgage not being paid as I won't be able to get the maternity break I was hoping for next month.

TIA

Janie4Now · 28 November 2012 at 3:17PM

Phone up your bank and ask for a temporary overdraft.

If they won't, cancel the direct debits you don't absolutely have to pay then call up the companies involved, grovel your apologies and promise to sort it all out. You will need to know how you propose to make up the missed payment though.....

FireWyrm · 28 November 2012 at 3:26PM

Banks dont prioritise in that way unless you are talking about Credit Card payments.

In the case of credit cards, you will find that things like Cash Withdrawal gets allocated last in the pot of money. These are also coincidentally the highest interest rates...go figure....

In terms of current accounts, you will either need to ensure that you have sufficient funds (by whatever means necessary) or cancel some of your DDs (so they dont 'bounce'). Be aware though that the companies who are expecting to present DD's might also charge a penalty for 'returned' or 'rejected' DD's although there might be some mileage in (just this month) claiming some sort of clerical/banking error which you appologise for and will rectify immediately...ya de ya de ya....

You might gain a month or so out of the confusion which ensues, but be prepared for penalties whichever way you slice it. It really depends on the Ts&Cs of the companies involved.

please-let-me-be-lucky · 28 November 2012 at 7:48PM

Direct debits are claimed by the companies so will 'present themselves' to the bank on the agreed date (or next available working day if that falls on a sat/sun/bank hol).

Standing orders are 'sent out' from the bank, by the bank. They simply won't leave the account if there are insufficient funds at the time (but you will still be charged).

For this reason, the bank will usually pay direct debits first and then not send the standing order. You can change the date of the standing order with the bank ahead of time so they don't try to leave the account, or you can cancel some direct debits so the ones you want to go out do, however as has already been said the companies may then charge you missed payment fees. Companies usually put in the request for the direct debit 3 working days before it leaves your account so it may already be too late for them to change any dates for you.

Please also be aware that direct debit companies are allowed to retry for monies not honoured the first time due to lack of funds in the account. This is usually 3 working days later so you might end up with double charges within a short space of time.

Hope this helps Xx

How do banks prioritise payments

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