Where does the money go?

redragon

I have a UK bank current account and a feeder account where surplus funds each month are transferred. This can build up into a tidy sum over a year. The interest rate however is crap. So, over the internet, I set up an electronic transfer facility with the account details of a Building Society that pays a relatively good rate.
I electronically transferred the feeder account money to the Building Society account.
The money left my account yesterday but has not reached the Building Society account. I contacted my current account bank and they said that it would take 3 working days to reach the new account. Nowhere on the transfer page does it say this!
My question here is: Where is this money and who is making money out of it? I will lose 3 days interest so someone is obviously making this interest instead of me. But who? And why does it take so long to electronically transfer money? Is this a scam?:mad:

Lokolo

Are you serious?

No-one benefits from this. It is a normal BACS transfer. Before a few years ago, ALL bank transfers took 3 working days. That's how the system works. Faster Payments (money arrives within 2 hours) are not gaurenteed and have only been "recently" implemented.

dunstonh

Where is this money and who is making money out of it?

it goes to the clearing house of the bank, then the bank of england then the clearing house of the receiving bank and then to the receiving account.

Who pays for implementation of the clearing of transactions?

And why does it take so long to electronically transfer money?

Because the system was bolted on to the paper based system. The newer faster payments system has been built and the banks are progressively moving electronic transfers over to that but some still get put through the manual way.

Is this a scam?

How much have you been scammed out of?

IronWolf

When transferred it will go into one big account in the bank, and they will then send it out to the relevant account. I made a mistake once and put incorrect details, it stayed in this account for 7days and then was automatically refunded to where it came from as it hadnt been allocated anywhere

System

If you put a £5 note in an envelope and posted it to your favourite nephew, where is the money?
You haven't got it, he hasn't got it - it's what is technically known as "in the post".

Sceptic001

Lokolo wrote: »

No-one benefits from this.

Surely that can't be correct.

Someone (either the sending or receiving bank) must have control of the funds during the 2-3 days (more when the transfer coincides with weekends and bank holidays) that they are invisible to the sending and receiving account holders. Are they able to gain interest from those "in transit" funds which presumably amount to many millions at any one time?

snowqueen555

If it isn't in your account to accrue interest, lets assume aone year drip feed account with monthly standing order

12 (months) x 3 = 36 days

Does this mean for a month of the year the money doesn't gain interest?

dunstonh

(more when the transfer coincides with weekends and bank holidays)

weekends and bank holidays are not working days. So, there is no benefit to a bank on those days.

Are they able to gain interest from those "in transit" funds which presumably amount to many millions at any one time?

Once its left their clearing house and with the bank of england they dont have the money any more.

What do you think a bank can earn on money that is in their hands less than overnight?
Who is paying of the clearing house and systems?

Sceptic001

dunstonh wrote: »

weekends and bank holidays are not working days. So, there is no benefit to a bank on those days.

I hesitate to disagree with you, dunstonh, but are you saying that interest is not paid on non-banking days?

Once its left their clearing house and with the bank of england they dont have the money any more.

What do you think a bank can earn on money that is in their hands less than overnight?
Who is paying of the clearing house and systems?

So you are saying that the money is in the hands of the Bank of England. If this is correct then presumably they gain the interest on any money they hold overnight?

redragon

The point I'm trying to make here is that If I sent an e-mail across to Australia, someone would get this e-mail almost immediately. I was told by my bank (Halifax) that if I paid a fee of £25 the money would be transferred within 2 hours. Not sure if this is BACS or not. I was under the impression that electronic banking is easier and cheaper. Yes it is. But only for the banks!
There needs to be more transparency in the financial industry. I can't believe that there are billions of pounds swirling around the system and not doing anything. Someone is using MY money along with all the other tranactions and using it. Where do you think all these hedge fund managers make their millions? There is only so much money in circulation so us poor old sods are loosing precious days each in lost interest whilst they gain. Yet another scam!

opinions4u

redragon wrote: »

Yet another scam!

Perhaps banks should be more overt with what things cost and charge you accordingly.

A typical counter transaction - 75p.

Issuing a cash card - £3.20.

Sending funds via BACS - 55p.

Using an ATM in a supermarket - 40p.

And then reimburse you the "scammed" interest that you've lost as a result of this horrendous behaviour.

£100 a month for 3 days at 2% = 20p a year. Minus tax = 16p a year.

Would that make you feel better?

It's all swings and roundabouts. There's no law against banks making money and there's no law against consumers choosing a bank with the charging structure that they consider most favourable for their circumstances. Banks built the system. You don't have to use it if you don't want to.

By the way, as Faster Payments gradually becomes the primary way that funds move from one bank to another the good news is that your problem disappears. The bad news is that fraud will increase and the cost of that fraud will doubtless be passed on to the consumer via reduced interest rates or higher charges.

At least with BACS there is more chance that fraud can be identified and stopped.