Subtle Direct Debit Payment scam ??

O_Miserly_one

Well, I'm not sure about this. My Capital One statement shows a payment due date of, say, 18 June. My payment of the amount after taking off the minimum payment has to be made 5 days before this (plus Sat or Sun if the due date falls here) to be credited by or before the due date. Fair enough - payments FROM me do take several days to work through the banking system. However, I set up a DD to make the minimum payment, and find that they take the DD money from my account several days before the statement due date "to ensure it arrives on time". Eh? They have the money on the same day they make the debit!! So I have asked them where the money is for those three or four days. Here's my message to them:

Dear Capital One,
I am confused about the statement due date and the direct debit withdrawal date.

Capital set the due date for payments to be received. I do not have any choice on this date, which can also fall on a non-banking day.

Capital also control the direct debit process i.e. originate the payment to my bank account.

For every debit, there must be a credit on the day the debit is made. Therefore, the debit you make to my bank account is balanced by a credit on the same day at your end. I would expect this credit to be into my Capital One account, but it is not.

Would you kindly explain where the credit to my account is held for the 3-5 days before it is placed into my Capital One account?

Other bills that I pay by direct debit are debited on the due date or afterwards. They do no seem to have a problem with this.

Your direct debits are made up to 5 days BEFORE the due date on my statement, which really makes the statement "due date" a hypothetical date. Why not give a due date 5 days earlier than you require. Payments can then be made on the actual day without worrying about late payments.

I feel very uncomfortable with the knowledge that you are withholding my direct debit payment from my account by making me pay early, and, I suspect, using the money (collectively with all your other accounts) to make overnight deposits and earn interest for yourselves. I can see that this would also help to offset the cost of the cash back refund you make to my card each year, but that means that it is funded by me. I'm not happy about that either.

Direct Debits are instant payments and it seems to me to be immoral of Capital One to manipulate the DD system by deliberately building-in a delay in this way.

I would like a satisfactory reply from an authoritative source please. I am not prepared to receive a standard customer service reply quoting "policy" and "procedures". For your information, I have copied this to Martin Lewis as I am sure that others will be very keen to know what you do with their money too. I shall do the same with your reply.

Yours sincerely,
etc etc.

I will post any reply I receive on this board as promised.

CLAPTON

the way it works is :-
they (the CC) request payment from you bank account.. the bacs system take a couple of days to transfer the request
then the money is sent from your bank to your CC by BACS, which takes a couple of days


now of course they are now meant to do same days transfers but that doesn't seem to be happening yet.

is that what you meant?

YorkshireBoy

Capital One operate a "your direct debit payment will be collected on or around xx/xx/xx" method. This usually means the DD is collected 3 days before the payment due date.

However, there is no 'delay' with DD's because, like Direct Credits (DC's), they're a simultaneous debit/credit operation.

However, the delay at Capital One may be due to several factors, including...

1. The use of a collection account means there may be a delay in applying the payment to your account.

2. Many card providers only update the customer facing online interface overnight, meaning a credit made today may not show until tomorrow, ie after tonight's processing run.

To be honest though, I'd be more concerned with not having an accurate date for the DD claim ("on or around" simply isn't good enough) than losing 3 of the 56 days interest free credit. Having said that, I can how it would be frustrating for anyone carrying an interest bearing balance because the 3-5 day delay the OP mentions means more interest is charged.

O_Miserly_one

Actually, what I'm trying to say is that with a Direct Debit, the company generate the money to pay off my balance by sending a payment request to my bank. They are in control of both sides of the transaction and have on their books a credit (to my account) and a debit (sent to my bank). However, they do not post the credit to my card for three days, or however long they choose.

So where is the money and why will they not make the DD claim on the statement due date? My council do this OK for council tax; my energy company do this and so do all the other direct debits I have set up. Therefore I surmise that this financial institution is manipulating the process for it's own gain.

Paul_Herring

CLAPTON wrote: »

the way it works is :-
they (the CC) request payment from you bank account.. the bacs system take a couple of days to transfer the request
then the money is sent from your bank to your CC by BACS, which takes a couple of days


now of course they are now meant to do same days transfers but that doesn't seem to be happening yet.

is that what you meant?

Direct debits may take 3 days to set up ('behind the scenes' as it were - I cannot set up a single DD into IceSave until 3 working days hence,) but the withdrawal from one account, and the deposit to the other should be on the same day.

The 'same day scheme' only applies to standing orders which, for most accounts I use at the moment, are still taking 3 days.

Milarky

O_Miserly_one wrote: »

Actually, what I'm trying to say is that with a Direct Debit, the company generate the money to pay off my balance by sending a payment request to my bank. They are in control of both sides of the transaction and have on their books a credit (to my account) and a debit (sent to my bank). However, they do not post the credit to my card for three days, or however long they choose.

I don't believe that is accurate with Capital One. Granted their DD collects 'early', but they apply the payment on the same date as the collection (At least that is my impression - I'll check some past dates)

I also have found that a manual 'BACS' payment only take one day (instead of the usual 2) to be applied to the account - even though it may take longer to reach Captial One in practice - AND they definitely receive Faster Payments to their sort code 40 02 50 (same one Egg uses) - although that is subject to who you bank with at present...

Milarky

Having just checked the last six months or so on my Capital One account against my payments, it is clear that Captial One gives value for direct debits no later than the day the payment actually leaves the account [the 'due date' in all cases below is the '29th'] The 'posted date' is the one used for interest purposes, I understand. We even have a DD leaving the bank four days after it applied to the account in January!

So apart from the dates being a bit all-over-the-place Capital One is certainly 'efficient' at applying payments to your account.

Dates (coded)

Transaction
Posted
Paid (Single Payment - BACS)
Taken (DD)

25 June SP from Bank [Nationwide]
25 Jun 2008 26 Jun 2008 PAYMENT RECEIVED

26 Jun from Bank
26 Jun 2008 26 Jun 2008 DIRECT DEBIT PAYMENT

27 May SP [Nationwide]
27 May 2008 28 May 2008 PAYMENT RECEIVED


27 May from Bank
26 May 2008 26 May 2008 DIRECT DEBIT PAYMENT

26 Mar SP [From Egg savings account]
26 Mar 2008 27 Mar 2008 PAYMENT RECEIVED

26 Mar from Bank
26 Mar 2008 26 Mar 2008 DIRECT DEBIT PAYMENT

25 Jan SP [from Nationwide]
28 Jan 2008 29 Jan 2008 STANDING ORDER PAYMENT

28 Jan From Bank!
24 Jan 2008 26 Jan 2008 DIRECT DEBIT RECEIVED