Direct debit & Overdrafts

jay_1978

Hi guys .. I have a hypothetical question just so I know in the future

Ok So I have a agreed overdraft with my bank and in my bank is say £30 and in a few days or so £40 will come out of my account direct debit but I only have £30 in.... Does the bank pay the extra £10 and just charge me that or any extra charges ? ,,, Hope u understood all that :P

rb10

It depends on the account that you have, and the associated Terms and Conditions. It would be worth reading the T&Cs so that you understand what would happen if this situation did occur.

But basically, the bank would have the following choice:

* Pay the Direct Debit, and so take you overdrawn. They may make a charge for this (depending on your T&Cs), and would probably also charge you interest or a daily fee until the overdraft is repayed.
or
* Not pay the Direct Debit. They may or may not make a charge for this, depending on what account you have.

dzug1

It depends on the bank:

it may not pay it at all - and charge you for doing so. The organisation taking the direct debit may charge you as well

or it may pay it anyway and charge you (generally a LOT) for an unauthorised overdraft

Bottom line is - don't let it happen

JohalaReewi

OP has £30 and an agreed overdraft so as long as the agreed overdraft is £10 or more, the DD will be paid and the OP will go £10 overdrawn. Have I missed something?

rb10

JohalaReewi wrote: »

OP has £30 and an agreed overdraft so as long as the agreed overdraft is £10 or more, the DD will be paid and the OP will go £10 overdrawn. Have I missed something?

No, just me not reading the post properly. My apologies for that.

So as long as it's covered by the arranged overdraft, the bank will make the payment, and the only charges will be interest or fees on the overdrawn balance, accruing each day until the account is brought back into credit.

jay_1978

Thanks for replys guys .... Yea I have a agreed overdraft of £50 and thats not touched so the bank would only be putting the odds to make up the direct debit ... And on daily charges. I did dip into my overdraft last week and the bank did not charge me anymore other than the amount I took out of my overdraft.. I did think they would charge me like extra daily charges until my wage went into my account ... Its yorkshire bank BTW

heloid

You should be looking at your available balance rather than your balance.
Available balance = how much you can withdraw (atm, direct debit, shop) without charges
Available balance is usually your positive balance + your overdraft limit.

If your balance is negative you get charged interest (usually 20-30% per month) on the amount overdrawn. eg If you are overdrawn up £50 constantly for a whole month you would get around £1.2 of interest charges max.

If you have an overdraft of £50, have a balance of £0 and withdraw £60 from an ATM you will get charged for an unauthorised overdraft (usually around £35) for exceeding your overdraft by £10. They may charge you again if you take even more money out (ie. another £35)

jay_1978

No my balance is £30 and the direct debit will be £40, Now my agreed overdraft is £50 which is not touched

heloid wrote: »

You should be looking at your available balance rather than your balance.
Available balance = how much you can withdraw (atm, direct debit, shop) without charges
Available balance is usually your positive balance + your overdraft limit.

If your balance is negative you get charged interest (usually 20-30% per month) on the amount overdrawn. eg If you are overdrawn up £50 constantly for a whole month you would get around £1.2 of interest charges max.

If you have an overdraft of £50, have a balance of £0 and withdraw £60 from an ATM you will get charged for an unauthorised overdraft (usually around £35) for exceeding your overdraft by £10. They may charge you again if you take even more money out (ie. another £35)