Who Gets the Bank Interest?

ydnA_2

After listening to all the recent "noise" about Bank Profits, I have never heard anyone offer an answer to a question which "bugs" me:-:confused:

When you pay a bill or transfer money between accounts via an online bank account, the money is removed from your account on the day you specify and any interest on that money ceases to be paid to you...BUT...it then takes 3 to 5 working days for the money to appear in the account to which you have transferred it, or to settle the bill you are paying.

Ouestion: Is it your bank or the payees bank that is earning interest on the sum of money involved, whilst it is "in limbo" between accounts?

On a daily basis, this must amount to millions of pounds that is "in transit" between various accounts within the banking system...no wonder such large profits are being recorded!!:rolleyes:

Can anyone put my mind to rest??

Astaroth

Neither really....

Depending on what method of payment is being used it may well pass through a number of other companies hands and therefore not actually be with either bank. Ultimately the receiver has to do more anti money laundering checks etc so out of the two it will be with them the longest.

Of cause a bank doesnt get paid interest, the "profit" is from not having to pay interest to the customer... though in most cases we are talking current accounts which accrue next to nothing in interest terms anyway.

If you look at the banking profits however you will see that only a relatively small proportion of their profit actually comes from UK retail banking (ie personal customers and SMEs) - RBS last year had £1.7 from £8 from this channel.

nomoneytoday

No one - the money is in a non interest bearing suspense account..
The banks can't spend the money as they don't have it available to them...