Online banking is ok, but...

Ecky-thump

I want to know why, when paying a credit card bill, nowadays, my bank doesn't show the payment made into the account on the day that I paid it. I always pay it 4 days prior to the date it is to be in by, allowing for the transfer as explained on the back of the bill.

I contacted the bank and they say it is the norm, but I have been paying my credit card bill this way for about 2 years and have never had this happen before.

Usually, when I make the payment my current account shows it going out and my credit card account shows it going in, both on the same day. To me this is the norm. I think the banks are making money from this kind of action, as it goes out of my account and does not appear anywhere for 4 days, so what is happening to it? Are the banks investing it for that period and reaping the rewards? If so, cheek! :eek: :mad:

daveboy

That is almost certainly what is happening - we might have the fourth biggest economy in the world, but we are miles behind when it comes to banks and their customer service.

I remember a programme on the BBC ages ago, where it showed how easy it is for transfers to be done the same day to different banks. It was either Sweden or Denmark that do it.

It is purely profit driven that it takes 3 or 4 days. It's just like when they send the bill to you - they send it second class post and it arrives on your doorstep around 7 days after the date on the statement. That's aimed at making you pay more interest too.

amyk_3

It does that on mine, even if I sent the money from HSBC current account to HSBC credit card - should be instant really, being the same company. Probably goes via India making HSBC lots of money like calls to their customer services!!
My HSBC local branch only opens 10am-3pm and if you want to pay a bill they won't let you do it over the counter, you have to call the customer services - apparently the branch doesn't have the facilities! Sorry a bit of a well deserved anti hsbc rant but yeah, I have the same 4 day delay.

Milarky

Credit card accounts update overnight - transactions need at least one day to appear on your statement. With bank debit cards it's same if used as a means of payment - the transaction cannot be shown immediately - only overnight. If you are just moving money between accounts with your bank this can be shown in 'real time' of course.

When a bank offers a credit card this does not mean that it is able to run the operation of that account directly alongside its savings and current accounts. It has to make use of 'Visa' settlements to record the transactions [purchases etc] on your card - which necessarily update overnight. When making payments onto your card you will instruct your bank to credit a collection account which may be with a different bank but which certainly will be part of an interbank settlement system [i.e. other cardholders will be with other banks for their current accounts]. So they will only be able to update your credit card account as part of the same interbank cycle - which is an overnight cycle.

[That said, if you have an HFC issued credit card with online access and you put a purchase on it they have a 'pending transaction' balance which is instantly incremented by the value authorised. Thus it is technically possible for credit cards to show the value of a 'pending' item immediately - albeit without the merchant's decsription, as this information follows the request for payment overnight]

Rafter

If somebody gives you a cheque, would you give them cash or pay it into your account and check it clears first?

Even electronic payments get bounced and sent back - a bit of delay is needed to ensure the funds clear ok, although 4 days is accepted as being too long and that bank computers are sophisticated enough that this should happen within 24 hours.

As for the interest, yeah the banks do make profit from the billions lost in the clearing process. I think I read somewhere the interest was something like £100m a year.

UK bank charges are amoungst the lowest in the world though, so although other countries have faster clearing systems, you also have to pay a monthly charge just for having an account or a payment per transaction.

If you want to avoid the delay have your current account and credit card with the same organisation. Often the transfers are instantaneous. Or you can pay by direct debit - normally this is taken on the due date rather than 4 days before.

R.

realaledrinker

A number of the smaller banks/operators also outsource their credit card systems to third parties, hence another reason for a delay in updating. Co-op Bank fit this description for one.

charlie12

amyk wrote:

It does that on mine, even if I sent the money from HSBC current account to HSBC credit card - should be instant really, being the same company.

With HSBC, if you make a payment from an HSBC current account to an HSBC credit card, the payment is made the same day. It won't show up on your CC statement for 3 working days, but if you take a look at the date of the payment when it shows up, it is the same date that you made the payment. Cash payments made over the counter at HSBC branches are also credited the same day. I have made payments 1 or 2 days before the due date and they were credited the same day and no interest/late payment fees were charged.

It's the reason why HSBC card statements don't state that payments from HSBC will take x number of days to clear. Take a look at the back of your paper statement:

HSBC wrote:

Payments made entirely in cash at any of our branches or an HSBC Bank cheque paid in at your HSBC Bank holding branch, will be credited for interest calculations the same working day. Your available credit will be updated within three working days.

As always, YMMV - it may be dependent upon they type of account you have. And it's always good practice to pay in advance of the due date by at least 3 working days.

Bear in mind that this is not common and most other banks do indeed have unacceptably long payment clearing times.