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  • FIRST POST
    • Dagobert
    • By Dagobert 15th Jun 07, 12:57 PM
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    Dagobert
    Interest on BACS Credits
    • #1
    • 15th Jun 07, 12:57 PM
    Interest on BACS Credits 15th Jun 07 at 12:57 PM
    In order not to pollute the Sainsbury thread, I am copying this question into a new thread:

    I have 25 regular savers and I pay all of them "manually" by BACS (except those that require a Direct Debit) and they all mature successfully.
    by Dagobert
    Impressive. In your experience, which of these building societies + banks pay interest from the same day as your BACS (done manually during working hours?), compared with how many delay paying interest until the next banking day - potentially causing nil interest on a Sat+Sun+Bank Holiday Mon?

    Would more of your regular savers receive interest from the same day if the funds arrived via Standing Order (arriving around 1am)? I too have regular savers with many societies, so am keen for your response - thanks.

    Presumably the same would apply for external transfers to + from this tasty Sainsbury's Bank savings account?
    by ED
    Dagobert
Page 1
    • Biggles
    • By Biggles 15th Jun 07, 1:11 PM
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    Biggles
    • #2
    • 15th Jun 07, 1:11 PM
    • #2
    • 15th Jun 07, 1:11 PM
    I think there might be some misunderstanding about the term 'manually' here. All BACS payments are electronic (even if you set them up 'manually' on your online banking) and arrive overnight like SOs & DDs. This is different from 'manual' bank giro credits, where you walk into your bank and hand over a payment slip to another account at another bank.

    I think all banks apply interest to 'cleared' funds on the day of receipt. That would include BACS and manual credits. It should also apply to all building societies but there may be an additional delay in the money getting from their clearing bank to their customers' accounts.

    The bit where you lose interest is while the funds are 'in transit'; this would be slightly longer with manual credits (unless to another branch of the same bank) and could be much longer with building societies and other non-clearing banks (maybe like Sainsburys?).
    • Dagobert
    • By Dagobert 15th Jun 07, 1:15 PM
    • 1,614 Posts
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    Dagobert
    • #3
    • 15th Jun 07, 1:15 PM
    • #3
    • 15th Jun 07, 1:15 PM
    which of these building societies + banks pay interest from the same day as your BACS ..., compared with how many delay paying interest until the next banking day ... ?
    by ED
    You will find this information in the T&Cs of your savings products. Unfortunately, however, they are very often silent or ambigious on this point (for instance using the word day where it should be working day or calendar day.

    Some pay from the day of receipt, some from the working day after, some from the calendar day after.

    If in doubt it is best to aim for the money to arrive on a Thursday.

    Would more of your regular savers receive interest from the same day if the funds arrived via Standing Order
    by ED
    Standing orders are repeated BACS payments. Therefore it does not make a difference whether you instruct your bank to send by SO or one-off BACS payment.

    This might only make a difference to when the money leaves the sending account depending on when you set up the one-off instruction and varying with each bank.

    arriving around 1am
    by ED
    The money arrives on day 3 of the BACS clearing cycle.

    Presumably the same would apply for external transfers to + from this tasty Sainsbury's Bank savings account?
    by ED
    It is not a question where the money comes from, just where it goes to and when it arrives.
    Dagobert
    • Dagobert
    • By Dagobert 15th Jun 07, 1:38 PM
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    Dagobert
    • #4
    • 15th Jun 07, 1:38 PM
    • #4
    • 15th Jun 07, 1:38 PM
    I think there might be some misunderstanding about the term 'manually' here. All BACS payments are electronic (even if you set them up 'manually' on your online banking)
    Originally posted by Biggles
    Thank you for pointing this out. The word "manual" was a rather unfortunate choice to describe one-off BACS payments as opposed to Standing Orders.

    I think all banks apply interest to 'cleared' funds on the day of receipt.
    Originally posted by Biggles
    Unfortunately, they don't: some pay from the day of receipt, some from the working day after, some from the calendar day after.

    there may be an additional delay in the money getting from their clearing bank to their customers' accounts.
    Originally posted by Biggles
    I have never seen a delayed arrival. The money is always credited on day 3 of the BACS clearing cycle. When the bank or building society starts paying interest, depends on their policy.

    There is, however, a delayed send. For instance, Alliance & Leicester and Cahoot hold on to the money an extra day before passing it to the BACS system, thus earning an extra day's interest.

    The bit where you lose interest is while the funds are 'in transit'; this would be slightly longer with manual credits
    Originally posted by Biggles
    To clarify: you refer to manual bank giro credits here, not automated BACS Direct Credits.

    and could be much longer with building societies
    Originally posted by Biggles
    The BACS transfer NEVER takes longer. See above.

    and other non-clearing banks (maybe like Sainsburys?).
    Originally posted by Biggles
    Sainsbury's use Halifax as a clearing bank. Any BACS transfers go straight into the Sainsbury's savings account, which is, in fact, a Halifax account.
    Dagobert
  • ED
    • #5
    • 15th Jun 07, 1:50 PM
    • #5
    • 15th Jun 07, 1:50 PM
    Thanks, Dagobert - and input welcome from others, too. Some people may assume this thread belongs in the section for Banking (cheque/current accounts), but indeed it is relevant for savings accounts, as it relates to depositing into them.

    I think there might be some misunderstanding about the term 'manually' here. All BACS payments are electronic (even if you set them up 'manually' on your online banking) and arrive overnight like SOs & DDs.
    Originally posted by Biggles
    My method varies from your's for online issue of BACS - I think? Typically 9am-3pm I make a BACS payment. I'm guessing you + Dagobert pre-arrange your BACS not less than the evening beforehand, so cleared funds arrive as early as 1am and technically are in the destination account for the whole of that day. Is my assumption correct?

    I prefer day-time issue of BACS from some institutions because, earlier that day, cash is deposited over-the-counter - earning interest in external savings account(s) till previous day.
    Last edited by ED; 15-06-2007 at 1:54 PM.
    • Dagobert
    • By Dagobert 15th Jun 07, 2:04 PM
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    Dagobert
    • #6
    • 15th Jun 07, 2:04 PM
    • #6
    • 15th Jun 07, 2:04 PM
    Typically 9am-3pm I make a BACS payment. I'm guessing you + Dagobert pre-arrange your BACS not less than the evening beforehand, so cleared funds arrive as early as 1am and technically are in the destination account for the whole of that day. Is my assumption correct.
    Originally posted by ED
    ED, I do not know where you are getting these times from. The only thing that matters is the cut-off point for BACS payments of the sending bank. And these times vary from bank to bank. They can be as early as 11:00!

    There is no time of arrival, just date of receipt. Whether you get interest on the day of receipt depends on the receiving bank's/building society's policy.

    I often arrange transfers on the day I want the money to go out so it remains in a higher interest savings account for as long as possible.
    Dagobert
    • Biggles
    • By Biggles 15th Jun 07, 4:39 PM
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    Biggles
    • #7
    • 15th Jun 07, 4:39 PM
    • #7
    • 15th Jun 07, 4:39 PM
    Unfortunately, they don't: some pay from the day of receipt, some from the working day after, some from the calendar day after.
    Originally posted by Dagobert
    I suspect you'll find that all the main clearing banks calculate interest on the cleared balance for that day (which would include an automated credit). As I said, it might differ for BSs and other bodies.

    I have never seen a delayed arrival. The money is always credited on day 3 of the BACS clearing cycle. When the bank or building society starts paying interest, depends on their policy.
    It's nothing to dowith the BACS cycle, it depends whether the BACS credit ends up in your account or in your building society's account while it awaits internal transfer.

    There is, however, a delayed send. For instance, Alliance & Leicester and Cahoot hold on to the money an extra day before passing it to the BACS system, thus earning an extra day's interest.
    Sadly, I think this is universal. The thing is, personal banking customers don't have direct access to BACS. We have to give instructions to our bank (usually via online banking) and wait for them to initiate the BACS payment.


    The BACS transfer NEVER takes longer. See above.
    It isn't the BACS system that takes the extra time. See above ;-)


    Sainsbury's use Halifax as a clearing bank. Any BACS transfers go straight into the Sainsbury's savings account, which is, in fact, a Halifax account.
    Exactly. They have to use a clearing bank. Sometimes this leads to the extra delay, sometimes not. In those circumstances, I doubt they would pay interest until it arrives from the clearing bank into your own savings account; this may be instant with some, eg Sainsburys, or it may take a day or three as you said above :-(
    • Milarky
    • By Milarky 15th Jun 07, 4:47 PM
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    Milarky
    • #8
    • 15th Jun 07, 4:47 PM
    • #8
    • 15th Jun 07, 4:47 PM
    Roll on November! I suggest we then all start sending one-off payments of between 1p and £1 like mad between all the accounts we individually hold and can then report back to a forum like this where those backlogs still appear. If any bank still requires a day's notice to send a payment, and is not working on a 'set-up-and-pay' basis as the better ones are now we will still have quibbles there, for instance, even under a 'same-day' transfer scheme.

    I'd always assumed that a BACS receipt was exactly like a cash receipt and earned interest from the next working day (on the equal assumption that you got interest on the other account that included the date of withdrawal - because it's symmetric) However I suspect that's not quite right.

    With cheques, from November, where you write your own cheque it will take two days to be drawn on your current account - but you will get interest from the savings account from the third day - including the date of deposit (eg Monday to Wednesday) This implies that banks don't pay interest for the date of withdrawal (so ought to pay it from the date of deposit just to be symmetric) and there is no reason why BACS receipts should not fall into line with that: Interest on deposit/no interest upon withdrawal
    .....under construction....
    • Biggles
    • By Biggles 15th Jun 07, 4:50 PM
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    Biggles
    • #9
    • 15th Jun 07, 4:50 PM
    • #9
    • 15th Jun 07, 4:50 PM
    Roll on November! I suggest we then all start sending one-off payments of between 1p and £1 like mad between all the accounts we individually hold and can then report back to a forum like this where those backlogs still appear
    Originally posted by Milarky
    Damn right. But isn't there still a suggestion that there'll be a small charge per payment, or has that gone away? Now that banks are finding they can't get away with penalty charges, they've got to try and make it up somewhere else.....
  • ED
    Milarky - I agree with your idea (repeated above).

    Biggles - The banks are greedy if truly thinking of using the reimbursement (a 'dip in the ocean') as an excuse, considering their vast profits by other methods.
    • Biggles
    • By Biggles 15th Jun 07, 8:31 PM
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    Biggles
    Biggles - The banks are greedy if truly thinking of using the reimbursement (a 'dip in the ocean') as an excuse, considering their vast profits by other methods.
    Originally posted by ED
    Er, yes. And your point is.....? ;-)

    But seriously, there will be millions of transfers, more even than there are now, and they will mount up. Hopefully I'm wrong and have missed the bit where the idea of fees was scrapped.
    • Searcher2
    • By Searcher2 20th Jun 07, 11:24 PM
    • 1,091 Posts
    • 288 Thanks
    Searcher2
    Not sure if this is the right thread.... but I am in the process of opening a Sainsbury's account and have intiated a test transaction from my Nationwide Flexaccount whilst I am waiting for my account to be approved.

    I rang Sainsbury's and they said they could accept BACS transfers from anywhere. I have about £230K in Birmingham Midshires online saver account which I want to transfer to Sainsbury's but when I tried to change my linked account from Nationwide Flexaccount to Sainsbury's saver account the BM website said that Sainsbury's wouldn't accept receipts into my Sainsbury's sort code/account. I don't know if that is because my account is not approved yet... but I suspect it could be because BM will only let me link to a current account.

    Assuming I cannot transfer direct from BM to Sainsburys, am I better

    1. transferring the money from BM to Nationwide Flexaccount and and once it appears there doing a BACS to Sainsbury's (from the above I am not sure how long it will take to appear) OR

    2. transferring the money from BM to Nationwide Flexaccount and and once it appears there doing a bank transfer (cost £20) to Sainsbury's to ensure it appears the same day OR

    3. setting up a Sainsbury's current account then linking my BM account to the Sainsbury's current account and transferring the money to that and then into the Sainsbury's saver account...which Sainsbury's say will happen the same day (but not immediately).

    ?
    • Biggles
    • By Biggles 21st Jun 07, 9:05 AM
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    Biggles
    It seems common to require the main 'linked account' to be a current account. Can you make payments to any other a/c as well as to the 'linked a/c'?

    Best bet otherwise might be to open a Sainsbury's current a/c, they ought to be able to do that easily enough as you already have an a/c with them.
  • ED
    £230,000 is a large sum. May be worth investigating possibility of a same-day CHAPS transfer from Birmingham Midshires direct to Sainsbury Bank. A fee of approx £30 would be happily countered by earning interest several days sooner than via BACS transfer.Anyone here experienced CHAPS from BM?
    • Searcher2
    • By Searcher2 21st Jun 07, 3:39 PM
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    • 288 Thanks
    Searcher2
    Thanks for the replies.

    I rang up Sainsburys first and they repeated that I could pay into the InternetSaver from anywhere and that maybe the reason I BM was refusing it was because it isn't authorised yet. Seems strange as I sent a payment from my Nationwide okay. Didn't get around to asking about a current account as I got cut off.

    I then rang BM having seen the post above and they can indeed arrange a CHAPS transfer for £35. Will be done the same day as long as I ring before midday. I think that is the way to go.

    I just wasn't sure in light of the original post how many days interest I would lose in BACSing it from BM to Sainsbury's. Originally I assumed 2 days. If it is 2 days then I work this out to be about £72 interest (at 5.75%) lost before tax.
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