Switch payment/clearing

Spivved1987

This may need a bank worker to answer, but here goes:

I bank online, and currently a switch payment I do today will not be reflected in my balance today, but will affect my 'available' balance more or less instantly. The switch payment will normally appear on tomorrow's transactions. What is my position in the following scenario:

As of today, my balance is £50 credit, but a few minutes ago I made a switch payment of £25. This has reduced my 'available' balance to £25. I now want to make a switch payment of £30. If I attempt this, will my bank 'bounce' the transaction at the retailers or otherwise penalise me? I know my pay goes in later today in cleared funds and therefore when the switch payments actually appear as transactions in my current account I will be well in credit.

If, as I suspect, the second switch transaction would be bounced or accumulate penalty charges for me, doesn't this give the lie to the soothing words we were always told about switch payments taking 'a day or two' to debit ones account?

And please, no lectures about spending money I don't have. Take that as read !

jonesMUFCforever

IMO the second transaction of £30 would be declined online as you have insufficent cleared funds.

coolesticeking

To be honest that all depends on the bank and if you have an Overdraft to cover the money.

The bank decides when you make a card payment, direct debits are due etc to pay these on your behalf when you don't have enough money left.

Because you are trying to make a payment more than the balance in your account, if the bank does pay this then it's taking you into an unauthorised overdraft (or authorised overdraft if you do have one) and you will be charged for this.

Spivved1987

Yes, I suspect you are right. It is annoying though, because it means that the advantage of being able to do some 'fine-tuning' around pay day as you can with cheques is now gone forever.

I think my question more related to why the switch debits don't appear straight away then, rather than a day later. Obviously the payments have cleared to the banks' satisfaction - otherwise they shouldn't be taken into account when calculating the 'available' balance. And since they have cleared, why not include them in the day's transactions in the way that cashpoint withdrawals are?

coolesticeking

As you find, the balance is reduced straight away when you make a card payment.

The reason why it does not appear on your statement though is because it has only been authorised and not settled at this point.

Each Merchant will 'settle' transactions for example at the end of each business day, and this is why it then appears maybe 1/3 days later.

BUT as you say the money has gone, and in the banks eyes you have spent the money at this point even though it may not seem to have gone through with not being on the statement.

meer53

If you keep a note of what you spend on a daily basis then you sholdn't have any problems with transactions on your account, whether they've debited or are still authorisations. If you want to spend £30 but only have £25 then it's best to wait until you have the cleared money to avoid any potential charges, it's not worth it is it ? Some banks have expansion allowances on accounts which will allow you to go over your agreed limit so you can't always guarantee that a transaction will be declined if technically you don't have the money. Sneaky but true !