Direct Debit cut of time

Andrewf1980

I currently bank with lloyds, and have recently had a direct debit returned.
At the start of the day the direct debit was due there was insufficient funds available (by £12) in the account. Upon realising this I transferred £150 into the account. The following day I looked on the internet banking it has the direct debit was deducted then returned into the account followed by the payment into the account (all on the same day). I have always been under the impression that when a payment is due to leave the account on a specific day, you would have all day to credit the account with sufficient funds to cover it. I have been studying the terms and conditions of this account and as far as I can tell this can only be attributed to the working day cut off time. The terms and conditions is a little vague on the specific times and this is exactly what it states , "the cut-off time is different for branches, Telephone Banking and Internet Banking but is usually not before 3.30pm (UK time). If the payment instruction is not received by the cut-off time on any working day, we will treat it as being received the next working day."

I was very disappointed, with my failing to get this direct debit payed as it is the first returned direct debit and hence Black Mark on my credit report for over 5 years.

I have 2 questions.
1) Is the bank right to have returned the direct debit?
2) How much influence on my credit rating is this going to make. (I realise this is not a simple question as there are many factors taken into account). Basically I bought my first house a few years ago on a credit repair type mortgage with Accord, following the end of the fixed term I am now in negative equity due to house prices and stuck with a very poor variable rate mortgage. I know I will have to make some of the difference of the house value to get a better mortgage deal, but is this going to limit the lenders available to me?

To rub salt in the wound, I have just had a letter from Lloyds stating I need to repay the unplanned overdraft, as if it had paid the £12 pound I was short. It states my balance being over the agreed limit!!! Surly they cant expect me to pay this unplanned overdraft charges as well???

LilacPixie

I was always under the impression that cleared funds had to be in your account the working day before the debit was due..

What affect, if any, it has on your credit rating depends on the exact circustances of what was due to be paid and if you have paid it by other means.

masonic

Something has clearly gone wrong here. I'd ask for an explanation.

I thought Lloyds was one of the few banks who allow funds to be paid in during the day to cover standing orders and direct debits that went out overnight. Even if not, you should either get charged a returned item fee (if the dd bounced) or an unplanned overdraft fee (if it was let through), not both.

jonesMUFCforever

OP what kind of account do you hold?

If it is one that does not offer any credit facilities or the customer is not eligible for any overdraft etc then the bank was right to return the direct debit as the funds should have been in the account the business day before.

If it is the first time this has happened the best you can hope for is to ask for the charge be waived.

Andrewf1980

I hold a Gold account, and have had this account for over 10 years, I have a large overdraft facility already set up in excess of 3 k. If you set it up to come out on a day why dose it come out the day before? Direct debits must be computer automated, so why not on the day?

The direct debit in question yeas for a credit card.

I have never had any bad credit, my wife had (although I believe this is no not on her record), and this is the only reason we had to get a credit repair mortgage.

masonic

Andrewf1980 wrote: »

I hold a Gold account, and have had this account for over 10 years, I have a large overdraft facility already set up in excess of 3 k. If you set it up to come out on a day why dose it come out the day before? Direct debits must be computer automated, so why not on the day?

It doesn't come out the day before, it comes out some time after midnight on the day. If Lloyds need you to have the funds in place in time for the money coming out, then that means by the end of the working day before the direct debit is due. A few banks allow you to pay in money 'late' to cover these payments, so if that's a facility you want you could move to one of those banks.

premierfella

The only thing that sounded unusual to me in the OP is the letter which apparently mentions unplanned overdraft fees (unless the letter is simply talking about IF there is an unplanned overdraft then such fees will apply).

Mention of the cut-off times is a red herring as that will no doubt be related to the grace period on overdraft fees that Lloyds TSB operates (this grace period is not a grace period on paying in covering funds to avoid payments bouncing - it only allows overdraft fees which would have been charged to be avoided by paying in covering funds by 3.30pm) - in this case Lloyds TSB will be looking to charge the £10 returned item fee (because they chose to bounce the payment rather than allow an unplanned overdraft - unfortunate because if they had permitted the unplanned overdraft you would have incurred no fees given the same day covering funds).

As advised already, contact them to ask for this fee to be waived in the circumstances - unless they have changed their policy in the last year or so, Lloyds TSB normally will waive a fee like this if it is the first fee waiver request in the last 12 months.

glitter123

My son's partner paid cash into her Barclays account on a Friday afternoon. Her direct debits were taken out on Monday (making her overdrawn) then they credited the cash from Friday later on Monday, but they still charged her for an unauthorised overdraft.