Accounts that don't pay out if there's no money to fund it

jago25_98

Here, in the UK if there isn't enough cash in the account to cover a:

- cheque
- bill
- direct debit
- possibly other systems too

The bank has the option of going into overdraft to pay it.
If the overdraft isn't enough, they can then go into `unauthorised overdraft`, create a debt against us and charge us.

A friend of mine had AOL try this, I think through a debit card. They had to try it 5 times and on the 5th the money came out and a debt of £500 created. A problem when he was saving only £100 a week. I don't understand what was going on behind the scenes and neither does he, but he knows AOL tried the first 3 times and his bank said no, and from there they some how forced the issue.

Contrast this with the Netherlands, where, if an account doesn't have the money, it doesn't get paid.

Is there a UK bank out there that defends our money like this?
Alternatively, can a Dutch bank work with direct debits? I might have to drive there, since we all EU now.

Mark_In_Hampshire

We're going to move to NL eventually, so I did check out having a Dutch bank account - it proved not to be so easy back then (a couple of years ago) but would be interested in knowing how you get on if you pursue this.

The service culture in the UK (if it did ever exist) has been replaced with the penalty culture. Banks don't want customers who can manage their money properly, nor do they want people who only create defaults, they want the customers in the middle who are daft enough to hand out direct debit mandates to people so the bank can capitalise, probably unlawfully, on peoples' mistakes - mistakes, which as you say, could be prevented by the banks in many cases.

However, yes, it is possible. I have a Halifax Easy Cash account which I've had for a long time and refuse their generous offers to upgrade to the reward account since that gets my electron debit card replaced with a visa debit card.

The electron card will not authorise a transaction if there are insufficient funds (thay may apply to HBOS only, perhaps) so it's impossible to accidentally overspend by e.g. £1 and then get charged extortionate fees.

I have direct debits completely disabled on the account because they are not secure; leaving the account able to have them means that eventually I'll end up paying bank fees for a DD I never set up in the first place (fraud, keying error) - that's happened to me twice prior to disabling the facility.

If I want to buy a service from a company but they only accept DD then they don't get my business.

Generally I deal with small companies who still know the meaning of the words "customer service" and who don't insist on open access to your bank account anyway.

I have a couple of subscriptions with monthly charges which are charged to a prepaid debit card I have. That's effectively an old Solo type Maestro card which again will not authorise without funds in place. If a payee attempts to take more than they should or on the wrong date, then it's just declined and I don't get hit with any charges.

One is an American company and HBOS fees for processing foreign transactions are scandallous (poor exchange rate then a fee on top) so those go on my credit card.

So, yes, it is possible. That's why Halifax are so keen to upgrade my account - fair enough, they'll give me £5 per month, but just two failed DDs on the account in one year undoes all of that (though I guess I could also have DDs disabled on that account). Halifax don't make any money from me from fees, so I'm happy for it to remain that way - I haven't paid a bank charge in maybe 7 years since I saw sense and abandoned direct debit as a means of payment.

coolesticeking

I'm not sure if Halifax has better systems in place than Santander but it used to advise people with Visa Electron Cards that it "may" still be possible to become Overdrawn and this would mean of course bank charges being applied to the accounts in question.

Isn't the EU or someone to what I was reading bringing it in where Banks have to give the Customer the choice if they wan't transactions to decline should the funds not be available at the time?

It is all part of just getting money out of us in bank charges since we don't pay for most of our banking services in the UK.

Paul_Herring

A friend of mine had AOL try this, I think through a debit card. They had to try it 5 times and on the 5th the money came out and a debt of £500 created. A problem when he was saving only £100 a week. I don't understand what was going on behind the scenes and neither does he, but he knows AOL tried the first 3 times and his bank said no, and from there they some how forced the issue.

AOL used to (and suspect they still do) use recurring payments. These can be put on either a credit card or a current account, and the bank typically cannot refuse the payment. Most complaints about them come about because of car insurance companies helping themselves to another years premiums when customers aren't explicit enough with them when they move providers, but others such as AOL aren't above 'forgetting to cancel' the payments.

jago25_98

Very belated update:
I am now looking for an account with this but also with free cash withdrawals. Metrobank appear to be aiming for this, and that is the critical difference to the Norwich&P offered accounts which also do not charge.

More incentive to go with Metrobank. They appear to be the only UK option, though there must be international options out there... somewhere.

"It is all part of just getting money out of us in bank charges since we don't pay for most of our banking services in the UK." > yes I agree. I think I'd rather pay if it had everything I needed and was charged exactly how I want (sliding scale)

Fiddlestick

Mark_In_Hampshire wrote: »

The service culture in the UK (if it did ever exist) has been replaced with the penalty culture. Banks don't want customers who can manage their money properly, nor do they want people who only create defaults, they want the customers in the middle who are daft enough to hand out direct debit mandates to people so the bank can capitalise, probably unlawfully, on peoples' mistakes - mistakes, which as you say, could be prevented by the banks in many cases.

I have never been penalised by a DD mistake - that's what the DD Guarantee is there for and I have claimed under it several times.

If it's a bank error they CANNOT penalise you - they MUST fulfill their obligations under the scheme.

Alpine_Star

jago25_98 wrote: »

Is there a UK bank out there that defends our money like this?

Banks will soon be required to offer at least one account that enables you to opt-out of going into into unauthorised overdraft.

http://www.oft.gov.uk/shared_oft/reports/financial_products/OFT1275.pdf

The details of how theses accounts will work will be published by the Lending Code Standards Board next month when the new Lending Code is launched.

Unfortunately the accounts will retain unpaid item fees which means you'll still be able to go into unauthorised overdraft (despite 'opting-out' of it) and so is self defeating.