Direct debits cancelled by bank

ERICS_MUM

I use the belt-and-braces approach to paying my credit card. I have a direct debit set up to pay the minimum amount automatically and I also make an on-line payment every monthly pay day, varying the amount depending on what other bills and expenses I have that month.

Can anyone see any flaws with this method please, am I missing a more effective payment method ?

Linda

markperky

jambosans wrote: »

So your credit card company only starts reporting to the CRA's after two late payments? This seems an odd practice, but I have to admit that I'm not very well versed in credit cards, so you may be correct.

They do make a distiction between late and missed payments, the ones I've spoken to allow you to correct genuine mistakes but you have to do it quickly. I'm guessing they have to give you a reasonable time to do that for fairness.

jambosans

ERICS_MUM wrote: »

Can anyone see any flaws with this method please, am I missing a more effective payment method ?

Aside from paying interest on the outstanding balance because you don't pay the entire balance, then I see no flaw. The Direct Debit ensures you don't miss a payment, and making one off payments means you can budget relative to that particular months outgoings (i.e. tight month, pay less to the credit card).

markperky

ERICS_MUM wrote: »

I use the belt-and-braces approach to paying my credit card. I have a direct debit set up to pay the minimum amount automatically and I also make an on-line payment every monthly pay day, varying the amount depending on what other bills and expenses I have that month.

Can anyone see any flaws with this method please, am I missing a more effective payment method ?

Linda

No, thant's entirely sensible. In fact that was the reason for setting up DDs in the first place for me, so that minimum payments are always made. I then pay off some of the balence by fixed amounts with standing orders. But if the DD isn't made the standing orderf amount for me didn't cover the minimum payment.

Mikeyorks

markperky wrote: »

Unknown to you, this triggers the bank to cancel your direct debit, and you are not informed. You pay the bill manually, you think everything is still OK. A month later, the credit card company requests payment again which is rejected but not due to lack of funds but the fact that the DD has previously been cancelled by the bank.

When the Bank cancels the DD mandate - that is automatically triggered via ADDACS to the originator (in this case the CC company). So they should not request a further DD payment the following month - as they know the mandate is no longer active.

YorkshireBoy

markperky wrote: »

They do make a distiction between late and missed payments, the ones I've spoken to allow you to correct genuine mistakes but you have to do it quickly.

With regard to credit cards, a payment that arrives between the payment due date and either the next statement date or the CRA update date (whichever occurs first) may be classed as 'late' and not reported to the CRAs.

A payment that arrives after the next statement date or the next CRA update date (whichever occurs first) will be classed as 'missed'.

However, not all credit providers will follow the above reasoning so don't rely on it.

I'm guessing they have to give you a reasonable time to do that for fairness.

Your guess would be wrong! They don't *have* to do anything. Anything they do for you will be down to goodwill.

Indeed, the opposite could be true because they have a responsibility, under the 'principles of reciprocity', to accurately report account conduct.

markperky

Mikeyorks wrote: »

When the Bank cancels the DD mandate - that is automatically triggered via ADDACS to the originator (in this case the CC company). So they should not request a further DD payment the following month - as they know the mandate is no longer active.

Ah. So they don't request it but just don't get paid (because I think it's still active because I haven't been told). I assumed they would request. Is the CC company supposed to inform me that the bank has cancelled it? Is that the way I'm supposed to find out?

YorkshireBoy

markperky wrote: »

Is the CC company supposed to inform me that the bank has cancelled it? Is that the way I'm supposed to find out?

Several, but not all, of my credit cards have done this, although they don't tell you who has cancelled the mandate (ie you or the bank)...merely that it's no longer active*.

Indeed, M&S have always done it (3 times with me)...even several months after I've closed a credit card with them and I've tidied up my DDs with my current account provider.


* So, could have lapsed under the dormancy rules (usually 13 months/400 days), been cancelled by the bank, or been cancelled by the customer. All you, the customer, get to see from the originator is "no longer active".

willo65

markperky wrote: »

Ah. So they don't request it but just don't get paid (because I think it's still active because I haven't been told). I assumed they would request. Is the CC company supposed to inform me that the bank has cancelled it? Is that the way I'm supposed to find out?

In my personal experience whenever I cancel a D/D I get a letter from the recipent to inform me the D/D is cancelled so would assume this is the same.

If you speak to Natwest and ask them to reinstate D/D then this should be ok for c/c to claim again on existing mandate.

Think the 3 months is to prevent companies reinstating d/d's that customers have cancelled without customer knowledge.