Credit Card payment takes 2 days to clear.

martkerem

For a while now I have wondered why when I pay for my Citi credit card by direct debit over the phone it takes 2 days to show on my Citi credit card. I have finally asked, why if the direct debit over the phone is automatic and the money leaves my debit account immediately it takes 2 working days for CitiBank to reflect this on my credit card? I was not willing to take "this is our policy" for an answer. I wanted to know where the money was after it left my debit account for two days. And, how come it two 2 days for CitiBank to reflect an electronic process?

After I insisted that I speak to a manager. He explained that it has to go through HSBC “clearing” bank to process the transaction. I was still not satisfied as this is again an electronic process and should not take that long. After getting frustrated by my persistent questioning, he suggested I speak to the FSA.

I contacted the FSA who said that I should contact the Association of Payment Clearing Services who could explain exactly how the process works but should CitiBank be benefiting in anyway from withholding my money during this clearing process, I could ask for that money back, if they refused to pay it the FSA would take it up on my behalf.

I contacted the Association of Payment Clearing Services who explained to me the process and said that a direct debit payment into a credit card, even if HSBC was “clearing” it (she explained it was a transfer switch) it was an automatic process and the whole process will be immediate. So it is up to the receiving bank to determine their terms and conditions as to how long they will take to show the funds. They will have the funds immediately gaining interest for 2 days.

I phoned up CitiBank and told them who I had spoken to and the information I had discovered that CitiBank was making interest on the money I was paying into my credit card and that I wanted that interest. Should they not be able to prove that their clearance process is different to the one that the Association of Payment Clearing Services has informed me of I will expect all the interest that CitiBank has made on my money. If they don’t pay me this interest back I will be taking this further with the FSA.

I will be getting an answer on Friday this week after CitiBank have done some investigation.

Has anyone else wondered about the 2-4 days clearing process of funds and where the money goes?

P.S. the Association of Payment Clearing Services also informed me about a fast paying system being implemented in November this year and that the participating banks in this fast payment system will be published in the next two days. I mentioned this to CitiBank and have suggested they get involved or they will be loosing many customers.

MPH80

If you are paying over the phone - you aren't paying by direct debit.

If you pay by direct debit - you sign a form which gives the bank the automatic right to collect the money from your bank account without any further interaction from you. What APACS told you about direct debit is in fact right. However ... as I said - Direct Debits are not initiated by a phone call.

If you are paying over the phone - I suggest you are paying with your debit card - in which case Citibank are right - it DOES have to go through the clearing process - and that, like BACS transfers, takes up to 3-4 working days.

For more information on precisely what direct debits involve - here's APACS on website:

http://www.apacs.org.uk/payment_options/automated_payments_4.html

And for more information about the fast payments system:

http://www.fastpayments.co.uk/

M.

Phoenix79_2

If thats all you've got to concern yourself with then think yourself lucky!

crazyfj

2 days is quick, I thought this was standard across the UK banking?

Normally its 3-5 days for direct debt to allow clearing and 2 days for a credit card.

MarkyMarkD

Martkerem is very confused.

You are paying over the phone by debit card payment, not by DD. DD is same-day value, but takes a few days for the payment to be processed by the originator, so whilst you could pay your credit card over the phone by this method, it wouldn't be very sensible. DD works for regular payments where the originator can notify you in advance of the amounts they are going to collect.

Credit and debit card payments, although largely electronic, go through their own clearing process. Some card companies choose to recognise these transactions as clearing their account straight away, but they won't actually get the funds straight away.

Nor does the transaction debit your current account straight away.

There isn't any case to answer. And it certainly doesn't help you to argue your (wrong) position if you don't understand the difference between a debit card and a direct debit payment.