Should DD Be Compulsary on CC's

CannyJock

chattychappy wrote: »

I have never signed a DD. I resent the way it is becoming increasingly difficult to avoid them - but accept that service providers are free to insist on them or charge extra if you pay by other methods.

Running a company who have collected monthly payments by direct debit, collecting money by DD is a basic way for a company to put some sort of reliability into it's cashflow and trying to minimise the cost involved in credit control and debt collection.

What I'd like to see is the same DD discount being given to people who have proven, say after 12 months, that they have a perfect payment history regardless of their method of payment.

paulq

chattychappy wrote: »

Absolutely NOT.

Why should my obtaining a credit card be conditional on my giving access to my bank account via a DD ?

I have never signed a DD. I resent the way it is becoming increasingly difficult to avoid them - but accept that service providers are free to insist on them or charge extra if you pay by other methods.

I also accept that some people choose to setup DDs and find it works well for them. Great.

IF you really wanted to make an argument I'd say ban DDs. That way people would be forced to look at their statements each month (or at least the balance) and make a positive act of paying it. Perhaps that way they'd be more in touch with their finances. Incidentally that's the REAL reason why some service providers (mobile phone companies etc) charge more for non-DD payers - a manual payment doesn't really cost £3 to process or whatever - it's because these customers churn more.

But of course, a ban on DDs would be unfair on the many people that are in touch with their finances, check their statements etc and just choose to pay this way.

So no bans please. No more nannying.

If you think the penalties are unreasonable for missing a payment then that's another issue - and that is the issue you should be addressing.

I think there would be far less charges out there if everyone was on a DD, And generally when you sign a new credit agreement the DD is built into it, in other forms of lending anyway. Everyone will have an opinion on something like this, people have stated they like the control over when they pay and stuff, but when you have a DD setup you can always over pay if you would like the flexibility

unidentified

jonesMUFCforever wrote: »

Compulsory D/D s will not help anyone. The ones who forget to pay by other means will probably not have monies in their accounts!

I'd be quite happy if they made DD compulsory.

Always setup a Direct Debit to make sure the money comes out, but on statement day always make an extra payment of varying amounts anyway.

It's the cards who don't/didn't allow you to DD that used to annoy me - dunno if any of those still exist anymore.

opinions4u

paulq wrote: »

Do you think the CCC's deliberatly not make Direct Debits compulsary on Credit Card Agreements, to make a little extra on peoples misfortune?

No. In fact, when I first got a credit card payment by direct debit was not an option. I had to post off a cheque each month for my monthly payment or queue in a branch. Alternative methods such as direct debt etc came along later.

So it isn't a plot to do over the customers, it's an evolution of service.

On any standard Loan you take out with any financial institution. It's setup automatically. I ask this as i see alot of people on these boards, stating they have missed their payments, asking for refunds stating it's not their fault etc.

Given that the amount you repay on a typical loan is fixed contractually, whereas a credit card agreement gives you flexibility on what you can pay, your comparison is like comparing apples and, well, grapes. Meaningless.

This is an entrapment by the CC knowing people will miss payments, due to being absent minded, putting off bill payments etc.

I'm afraid you are talking complete nonsense.

Ok you sign the T&C's to say its your responsibility to manage your account, but surely the lender has a certain respnsibility to make it as easy as possible for customers to make their payments?

As trolling goes it is pretty impressive. There are half a dozen different ways to make payment to my credit card company. They could hardly make it easier.

Quick thought:

Compulsory direct debit: DD bounces - £30 fee from bank, £12 fee from credit card company.

No direct debit, customer forgets to pay: £12 fee from credit card company.

To me it's a no brainer. Give the customer choice.

I think alot of people see it as "Free cash" not realising how much they can afford to pay back. So they just max their limit, then complain when they see they are not paying any capital off when they get their bills.

In that case "a lot of people" are really stupid.

It really does come down to education. If consumers had a better understanding of what they were doing maybe they would be reluctant to go on spending spree's

So an hour a week in the national curriculum telling kids "if you borrow money you must remember to pay it back" would make a difference? Give me a break. The state education system can barely teach kids to read or write, let alone get across complex concepts like taking personal responsibility for paying bills on time.

bouncydog1

The responsibility has to lie with the person who borrows the money - they are savvy enough to complete the application form so they have to have enough common sense to know that the money has to be paid back. The majority of banks have internet banking and individuals must be organised enough to ensure that they can pay back what they borrow.

I do appreciate that sometimes people are left in positions beyond their control - unexpected job loss, illness etc - but an awful lot of individuals get themselves into financial difficulty because they cannot organise their money.

If DD was made compulsory then I think it is highly likely that the same people who miss payments would not have sufficient funds in their bank accounts to cover the DD on the due date and would then moan about the charges imposed for the overdraft.

This is a biased view which will not gain much support I am sure, but if people feel they are able to take on the responsibility for a credit card, the first thing they should do is ensure that they set up a repayment schedule, whether this be by DD that they set up or a diary system so they don't miss a payment.

chattychappy

CannyJock wrote: »

Running a company who have collected monthly payments by direct debit, collecting money by DD is a basic way for a company to put some sort of reliability into it's cashflow

Well.. yes, credit control costs money and I accept that this is part of it and maybe all of it for certain types of business.

But for some businesses - especially continuous service providers, churn is a huge problem and this affects the ability of those companies to raise finance or securitise their future income.

A customer who signs a DD is much less likely to cancel a service and is therefore worth more. This means that the revenue stream can be sold or valued at a higher price. For some services (eg cable TV provision - something I've been involved in), credit control isn't really a problem because the service is high margin and the service can be cut off very easily in order to prompt payment - and if never received, the amount to be written off is small. The real trick is to get people to sign a DD or CCA. Then they will likely take a long time to get around to cancelling. Without a DD or CCA after a few months they are more likely to see a bill and decide it's not worth continuing and cancel. In the CATV area I last have figures for, churn from non-DD/CCAs was running at about 7 months compared with 18 months for DD/CCAs. The non-DD fee was set at such a level to get all but a hardcore signed up. Churn here is defined as any kind of downgrade of service.

ISPs are another example - people tend to sign up to them and then forget about them unless there is a real problem. A mate of mine took out a broadband connection - 2Mbps for £14.99 a month several years ago. 3 years ago he started using internet via his cable TV connection. So for 3 years he has been paying for a connection he never uses. He didn't even realise it - they operate ebilling and he doesn't check his bank statements. He thought the CATV company would "take care of everything".

chattychappy

paulq wrote: »

Everyone will have an opinion on something like this, people have stated they like the control over when they pay and stuff, but when you have a DD setup you can always over pay if you would like the flexibility

I would like the flexibility just to make a single payment when I want to.

Come to think of it, if I'm running short of money I'd rather have the flexibility to choose how I default - perhaps by not paying the credit card but writing out that cheque to pay another bill.

You would take away that control. With a DD that choice would be taken away. First come, first served perhaps? Or DD bounces and I get double charged? Or DD goes through but I get even worse bank charges?