Where does all the interest go to?

dunstonh

Its not same day though. The money leaves the account on Monday and gets there on Wednesday. Only when its at the same bank (or group in many cases) is it same day.

Walletwatch

dunstonh wrote:

You are thinking of same bank transfer. ie, a LloydsTSB bank account transferring funds to a LloydsTSB mastercard will be same day but that doesnt use the direct debit system.

This isn't the case even for transfers from a bank account to a card offered by the same bank - for example, I bank with Citi and have a Citi credit card, however due to Chinese walls and stuff (I guess), Citi Financial, who own the credit card business bank with HSBC and so my credit card payments take the same 2-3 working days as any other bank to bank transfer.

dunstonh

OK, i should have answered some banks are same day between accounts and their credit card.

student100

lipidicman wrote:

Pfffffftt.....the banks out of pocket!

whats that I hear....?

its the sound of the world's smallest violin playing just for the banks!!!

You make it sound like moving money is the only way the banks make money....

....think of the SHED LOADS of cash they make on all of our money they have on deposit. If a bank wont move it for free, would you bank with them? No, you would pick the bank that would. Competition would result in free rapid transfers - the problem is lack of competition

I'm not saying you should feel sorry for the banks, but you should realise that banks are businessess. Businesses make money. It's the only reason they exist. They have to make money in order to survive.

There is plenty of competition in the banking industry, but no bank is going to start subsidising super-fast transfers for consumers because the cost to them is greater than the potential benefit (arising from more customers etc.)

This whole thread is about cost/benefit analysis (i.e. is it worth me transferring money to a higher rate account or will the cost be greater than the benefit?) Until such a point as a bank decides they will get more benefit from improving transfer speeds than the costs involved, it won't happen.

lipidicman

But you make it sound like banks have to make a profit on everything they do. THEY DON'T. They have to make an overall profit. How else do you explain 'free student overdrafts' and the like

robnye

are you aware most banks lend money to each other overnight......... and receive interest on the money lent.......


reminds me of the superman film , where a villain writes a program to collect all of the bits of cents and credits them to an account, thereby raising millions......... :eek:

is that the same as the missing interest........

student100

lipidicman wrote:

But you make it sound like banks have to make a profit on everything they do. THEY DON'T. They have to make an overall profit. How else do you explain 'free student overdrafts' and the like

EVERYTHING a business does voluntarily (i.e. not as a result of a legal obligation) will have the planned effect of increasing total profit, directly or indrectly*. The benefits WILL outweigh the costs, or they won't do it. It's the only way a corporation can justify its actions to its shareholders.

When a bank gives a free overdraft on a student account, they do it because the benefit to them (a potential long-term customer) is greater than the cost of providing the overdraft. When a CC company offers a 0% rate for 9 months, they are NOT doing it to "benefit the customers". They are doing it SOLELY because by offering a 0% rate they get more customers with debts, some of whom will keep the debts on the card after the 0% rate ends and this will bring in profits to the bank.
When a supermarket has a sponsored charity that they promote on all their carrier bags, they are NOT doing it because they are kind, caring businesses. They are doing it because it's good PR and it makes them SEEM like a good company in their customers' eyes, which means customers feel happier shopping with them, so they get more profit.

Corporations are profit-driven moneymaking machines. They won't do ANYTHING unless the benefits to them are more than the costs.


*If in the end it doesn't increase total profits, then it must be as the result of a mistake; a bad business decision. e.g. a failed advertising campaign or an incentive which is too easily abused may cost the business money, but that was not the original intention.

Walletwatch

student100 wrote:

When a bank gives a free overdraft on a student account, they do it because the benefit to them (a potential long-term customer) is greater than the cost of providing the overdraft.

In short, catch 'em young ;-)

MarkyMarkD

dunstonh wrote:

Its not same day though. The money leaves the account on Monday and gets there on Wednesday. Only when its at the same bank (or group in many cases) is it same day.

?

I am transfering from my A&L current account to my A&L online saver, as I said. That IS same day.

dunstonh

That is not using direct debit though. That uses BACS and as both are with the same bank and that bank uses online transmission, it does the entries same day.