Where does all the interest go to?

student100

Internal transfers within the same bank (or between organisations with the same parent bank e.g Natwest/RBS, Halifax/BoS etc) probably don't even go through BACS at all. They'll just use some internal transfer mechanism.

I can transfer online from my Halifax current account to Halifax web saver (or any other Halifax account) and it happens instantly, within a couple of seconds.

Walletwatch

student100 wrote:

Internal transfers within the same bank (or between organisations with the same parent bank e.g Natwest/RBS, Halifax/BoS etc) probably don't even go through BACS at all. They'll just use some internal transfer mechanism.

I can transfer online from my Halifax current account to Halifax web saver (or any other Halifax account) and it happens instantly, within a couple of seconds.

That's right, internal transfers are treated as house-transfers (both debit and credits staying within the Bank) and as such, don't go thro' any clearing n/w.

MarkyMarkD

dunstonh wrote:

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.

We seem to be at cross purposes here.

I've made two points:

(1) DD is same day VALUE - not that the transaction happens same day as instructed, but the funds debit and credit on the same day so there is no lost interest. Therefore DD is the best method to transfer funds to/from a savings account, if the option is available (and I appreciate that it often is not) or, indeed to make repayments of stoozing balances to credit cards (for which the option normally IS available).

(2) I can transfer money same-day from an A&L current account to an A&L internet savings account - once again no lost interest. This has nothing to do with BACS or DD - it's an internal transfer between A&L's systems. In fact, the funds are available instantly in the "available" balance on the current account if you do the transaction in reverse and hence available for withdrawal through an ATM or for spending by debit card.

You seem to be confusing the two points and suggesting I'm in error. I'm not.

dunstonh

We seem to be at cross purposes here.

I've made two points:

(1) DD is same day VALUE - not that the transaction happens same day as instructed, but the funds debit and credit on the same day so there is no lost interest. Therefore DD is the best method to transfer funds to/from a savings account, if the option is available (and I appreciate that it often is not) or, indeed to make repayments of stoozing balances to credit cards (for which the option normally IS available).

The problem is that it isnt same day value. A direct debit could leave your bank account on a Monday and not get to the originator until Wednesday at the earliest. Only if the both accounts at are the same bank, can same day transfers take place and that system isnt direct debit (which you acknowledge).

My knowledge of the direct debit system may be over 10 years old now. However, after spending 18 months dealing with the adminstration of direct debits I did learn alot about the process. After this thread i did some research which indicated that the technology has improved but the timescales are still the same. I havent read anything in my checks which suggests that same day transfer takes place.

Walletwatch

dunstonh wrote:

The problem is that it isnt same day value. A direct debit could leave your bank account on a Monday and not get to the originator until Wednesday at the earliest. Only if the both accounts at are the same bank, can same day transfers take place and that system isnt direct debit (which you acknowledge).

My knowledge of the direct debit system may be over 10 years old now. However, after spending 18 months dealing with the adminstration of direct debits I did learn alot about the process. After this thread i did some research which indicated that the technology has improved but the timescales are still the same. I havent read anything in my checks which suggests that same day transfer takes place.

I think, Dunston, you are referring to ledger or book balances, while Marky is referring to value-dated balances. With a DD, the funds may leave account A on Monday and reach account B on Wednesday, which would mean the actual dates when these entries appear on the respective statements on Monday and Wednesday respectively. But the value date of these transactions would both be the same (not sure which of the three possible days it would be), thus ensuring that there is no loss of interest due to funds being in transit between the two bank accounts.

A transfer doesn't need to be same day to be value-dated the same day at both ends.

Does this agree with both of you? (That is the only plausible scenario I can think of in which both of you would be correct)

MJSW

A direct debit could leave your bank account on a Monday and not get to the originator until Wednesday at the earliest. Only if the both accounts at are the same bank, can same day transfers take place and that system isnt direct debit (which you acknowledge).

How then do you explain this: "When do I get the money? The money will be credited to your account the same day as it is debited from your customer’s account."

(Taken from: http://www.datacash.com/directdebit/howitworks.html ).


I agree entirely with MarkyMarkD. The statement dates with DD transfers have always been absolutely identical on both accounts in my experience. This is certainly the case with transfers from ING, with an account I previously used with C&G, and with credit cards where I've had a DD payment in place (Egg & Nationwide). In such cases both accounts have always been debited/credited on the same day (and by this I mean the day shown on the statement).

MarkyMarkD

I fear I'm flogging a dead horse here, but thanks MJSW for agreeing with me.

Dunston isn't being consistent with himself, which doesn't help.

dunstonh wrote:

Direct debits are still 3 days.

Processing cycle

The three day cycle (minimum three English bank working days) comprises:

• Day 1 (Input day) - receipt of an organisations payment file at BACS Payment Schemes.
• Day 2 (Processing day) - All data accepted is processed through BACS Payment Schemes and passed onto the paying banks.
• Day 3 (Entry day) - payments simultaneously debited and credited to the relevant accounts.

(My emphasis).

I have never, ever, ever known DD to NOT be effected with same day value. Hence, DD is a far better method than BACS for transferring funds, if it is available as an option.

And Wallet, thanks for the suggestion, but it's not correct. There is no circumstance in which both Dunston and I are correct - because I am correct, and he is not, as regards Direct Debit. The statement date AND the value date are the same for both parties for a DD.

Walletwatch

Finally, light at the end of the tunnel !! That makes sense now, Marky, thanx 4 the clarification.

dunstonh

I'm going to concede. I guess things have moved on. Although i have seen some bulk direct debit providers quoting 3 days still (as transaction), some are quoting instant.

Maybe the IP version of DD processing is same day whereas the old version is still 3 days.

[Deleted User]

I should take my own advice. I've just noticed that the interest on my Halifax Monthly saver a/c has diminished to such a degree since I opened it, that it now takes over 3 years to win back the interest lost on the payments!