CHAPS vs BACS - Is it worth it? ***BETA Calculator Now Online***

derrick

If I send by BACS I lose the £15.07.
If I use CHAPS I pay £20. but get the 2 days interest I would lose via BACS, because interest is paid immediately.
therefore I only "pay" £4.93 ? What am I missing?

Kilty_2

I've updated my original post to add thanks to Dagobert as well as explain myself a little as far as the advertising goes. I'm also going to modify the page itself to reflect this.

strawberrylane

derrick, apologies - you are correct and I was wrong. The CHAPS transfer in your example would indeed be the least expensive option as you point out.

edit - i've edited my previous post so that it is now correct so that anyone reading it afresh will not be confused by the calculation error i made!

Kilty_2

Right, changed my mind, I've now canned the advertising.

Dagobert, and anyone else, if I've caused ill feeling amongst us by what I've done then I apologise.

nomoneytoday

£20 for a payment !! IMHO that's worse than the unauthorised overdraft charges.

IGK

Looking at this carefully I think there is a flaw in the algorithm.
The interest rate of the originating account DOES matter because by making a CHAPS payment you can leave the money in the original account for the time taken for the BACS payment to clear, and keep earning interest.

For example.
Transfer £100,000 with 2 days gap and interest rate in the target account 0%, CHAPS fee £20.
Plugging this into the calculator you get

Using CHAPS instead of BACS, you would lose £20 since the interest lost using BACS is less than the CHAPS fee.

What it's missing is that you can wait for 2 days to make the CHAPS payment (since with BACS the money doesn't arrive in the target account until 2 days later). In this example if the originating account paid 5%, assuming 20% tax, you will earn £21.92 interest in the originating account by waiting 2 days and making the CHAPS payment then. Therefore CHAPS is £1.92 cheaper not £20 more expensive.

This scenario can ofter occur if you need to transfer from an interest-bearing account to, say, a current account, for the purpose of writing a cheque or making a direct debit to another account.

DocProc

Perhaps, "Are you pushing or pulling funds?" should be an added question within the calculator.

eg, Push funds out of the average savings account and you will lose interest immediately from that date - although the funds won't appear in the receiving account until the CHAPS or BACS payment has cleared.

As we know, CHAPS is fairly quick and can actually be done and cleared the same day if the transaction is done early enough in the morning. The deadline on the time varies from bank to bank and can be from 11:30am right through to 3pm, depending on the bank.

BACS transfers can take anything from 2 to 4 days.

With ICICI and Lloyds TSB, both banks have a 30-xx-xx sort code. This means that ICICI are sharing a 'Llloyds TSB facility' and so it is almost 'intra branch banking'. Sometimes, if things are initated early enough, transfers between these two are done by the end of following day.

I don't think you can pull funds from a savings account into a current account.

You can push or pull them from most internet savings accounts.

And you cannot push funds from a linked current account into an Icesave savings account. All pushing and pulling has to be done from within Icesave.

Kilty_2

:T :T

I'm going to be making a major update soon, providing Dagobert is happy with the acknowledgement I have added. If not I'm considering pulling the page down.

DocProc

Kilty says
I'm going to be making a major update soon, providing Dagobert is happy with the acknowledgement I have added. If not I'm considering pulling the page down.

Kilty

A few words of advice:

Never ever get yourself into situations, which have "I lose/you win" about them.

It's also not a good idea to get into situations, which have "I win/you lose" about them either.

If you can, always go for the "I win/you win" situation.

Now supposing Dagobert doesn't give you a positive nod?

Well, all the rest of us lose your calculator tool.

You lose the site's usefullness to earn some advertising revenue to help finance it. And if you shut it down, well it certainly ain't going to grow any bigger and make a you a millionaire. And I can't believe you have already taken off the adverts, anyhow! Why, for goodness' sake? What do you think runs this site? Fresh air? And no, you don't have to design calculator tools just for MSE.com

I look forward to your positive action to add more "I win/you win" valuable updates to your calculator tool web site.

Whilst writing, I also acknowledge you have given credit on your site to where you think it's due, too.

haggai

Thanks for the tool Kilty. I think it would be really helpful to show the break even point too. Maybe you could do that if no amount is entered in the first box?