Tesco Credit Card Direct Debit Warning

brakepad

I'll get straight to the point and then fill in the details:
If you have a Tesco Clubcard Credit Card, have received a statement, and plan to set up a Direct Debit to pay the minimum or a fixed amount, I strongly suggest that for this first month after setting up the DD you also make a manual payment for the minimum amount to avoid a late payment fee.

I am in this situation, and have a new Tesco 0% card. I also have several other 0% credit cards in operation, each with a DD set up for the minimum amount, and reminders to pay off the balance etc.

After receiving my first statement dated 21st July 2013, I set up a DD on 27th July for the minimum amount, which was due on 10th August. There was a warning online that a DD could take up to 10 working days to set up, but this was within the timeframe of the due date.

My Tesco online account immediately showed (and still does show) that a DD has been requested for the minimum amount, with a 'Next payment' date of 10th August.
A few days later my current account also showed DD to Tesco in place.

Today (15th August) I checked my Tesco account to find that no payment had been taken, and a £12 late fee charged.

On phoning Tesco, I was told that their system does not allow DDs to be set up after the statement date, which is why the payment had not been taken. This is verging on being underhand, as there is nothing on the statement to suggest that this is the case, and Direct Debit is listed as the first payment method in the 'How and when to pay' section of the statement.

The first person I spoke to was polite and helpful, and offered to refund the £12 as a 'goodwill gesture'. There was however no acknowledgement that Tesco were in the wrong in any way.
After speaking to someone more senior, I got some acknowledgement that this was a known behaviour of their system, that the documentation was inaccurate, and that I was not the first person to be affected.

Personally I think that this is a ridiculous state of affairs, whereby DD is listed as a payment method on a statement, but cannot be used until the following month. It is especially nasty as there is no warning that this is the case AND both my bank & the Tesco website indicated that the payment had indeed been set up.

You don't get any warning that the DD is going to fail, as it's not taken until the due date, so there is no way to respond to it not going through other than a preemptive payment.

I've not had this issue on any other credit card, and it must be fairly common chain of events to receive a statement and then set up a DD to pay it.

To reiterate, Tesco were fairly helpful and have refunded the fee, and assure me that the 0% deal will not be affected. I am concerned that my credit history may reflect this missed payment, hence I'm putting up this warning to others.

I'd be interested to know if anyone else has experienced this with this or any other card.

Herbalus

brakepad wrote: »

On phoning Tesco, I was told that their system does not allow DDs to be set up after the statement date, which is why the payment had not been taken. This is verging on being underhand, as there is nothing on the statement to suggest that this is the case, and Direct Debit is listed as the first payment method in the 'How and when to pay' section of the statement.

Sorry to report that this is completely normal, and all credit cards work this way. A direct debit has to be listed on the statement to be effective, so if your statement does not say 'this payment will be taken by direct debit', then it won't be. Unless you set up a direct debit upon activating the card, which I always do, the first payment is always recommended to be manual.

I happened to me when I got my first credit card (aged 18), but this is just how the system works. Direct debit needs to be before the statement.

brakepad wrote: »

The first person I spoke to was polite and helpful, and offered to refund the £12 as a 'goodwill gesture'. There was however no acknowledgement that Tesco were in the wrong in any way.
After speaking to someone more senior, I got some acknowledgement that this was a known behaviour of their system, that the documentation was inaccurate, and that I was not the first person to be affected.

It's impressive to get this statement, because most providers will just tell you that the direct debit needs to be set up before the statement. They won't apologise for it, because that's how it happens across the board.

brakepad

Thanks for the info, I have historically paid the full amount manually each month and only recently started using DDs on my cards, ironically as a failsafe!

I have learned the hard way that this appears to be a standard, if rather tardy and unnecessary practice. What is unreasonable, and what Tesco basically agreed, was that the wording/documentation is not clear that this is the case. In fact it is the complete opposite - the statement lists Direct Debit as a viable payment method with no such caveats.

With hindsight, if I go to my Capital One account to set up a DD it states "You should continue to make payments as usual until your statement shows that payments will be taken by Direct Debit", which is fair enough.

On the Tesco site there is no such warning, simply that it can take up to 10 working days to set up.

On entering the DD details my Tesco site shows this:
(It appears I'm not allowed to post links as a new user, but it shows the following):
Bank account holder's name,
Sort Code,
End of acc num,
Payment Type: Minimum Payment,
Next Payment: 10 Aug 2013

and my bank account shows this:
Destination name: Tesco Bank,
Type: DD,
Reference: My Tesco card number,
Last paid: blank,
Amount: blank


In both cases I would say that there is no indication that the DD has not been set up to make the payment that was due on the 10th.

I would also say that it is generally misleading to list 'Direct Debit' on the back of statement as a payment method, if this is not actually a payment option for the statement to which it refers.

Wheres_My_Cashback

brakepad wrote: »

I'll get straight to the point and then fill in the details:

So why didn't you, instead of writing a load of waffle/trolling ?

brakepad wrote: »

Thanks for the info, I have historically paid the full amount manually each month and only recently started using DDs on my cards, ironically as a failsafe!

I have learned the hard way that this appears to be a standard, if rather tardy and unnecessary practice. What is unreasonable, and what Tesco basically agreed, was that the wording/documentation is not clear that this is the case. In fact it is the complete opposite - the statement lists Direct Debit as a viable payment method with no such caveats.

With hindsight, if I go to my Capital One account to set up a DD it states "You should continue to make payments as usual until your statement shows that payments will be taken by Direct Debit", which is fair enough.

On the Tesco site there is no such warning, simply that it can take up to 10 working days to set up.

On entering the DD details my Tesco site shows this:
(It appears I'm not allowed to post links as a new user, but it shows the following):
Bank account holder's name,
Sort Code,
End of acc num,
Payment Type: Minimum Payment,
Next Payment: 10 Aug 2013

and my bank account shows this:
Destination name: Tesco Bank,
Type: DD,
Reference: My Tesco card number,
Last paid: blank,
Amount: blank


In both cases I would say that there is no indication that the DD has not been set up to make the payment that was due on the 10th.

I would also say that it is generally misleading to list 'Direct Debit' on the back of statement as a payment method, if this is not actually a payment option for the statement to which it refers.

YOU screwed up, lesson learnt, take it on the chin and move on !

brakepad

Crikey, was trying to help some other people avoid the same hassle. Seems a bit underhand to me.

Herbalus

Wheres_My_Cashback wrote: »

So why didn't you, instead of writing a load of waffle/trolling ?

YOU screwed up, lesson learnt, take it on the chin and move on !

Not really sure that's warranted. If you feel like he's wasted your time, you are also free to move on without commenting.

YorkshireBoy

brakepad wrote: »

...what Tesco basically agreed, was that the wording/documentation is not clear that this is the case.

They were fobbing you off to diffuse your anger and make you feel like they (specifically the person you were talking to) were on your side! Classic customer service tactic...and you fell for it.

When I set my Tesco Direct Debit up they wrote to me VERY CLEARLY stating...

Thanks for returning your direct debit form.

Once it's set up we'll put a message on your statement saying the payment will be collected by direct debit.

Until then, it's important you make your payments as normal.

Then, just two days later, they sent me another letter VERY CLEARLY stating...

Thanks for arranging to pay your card account by direct debit.

Please check your details below (insert bank account sort code/account number).

Once the direct debit is set up we'll put a message on your statement saying we'll collect payment by direct debit.

Until then, it's important you make your payments as normal.

It's good that you're trying to warn others of how it works, but here's a better "warning"...

When the provider sends you a letter (or indeed two letters as Tesco do)...READ IT.

jay87

i always set up a direct debit before charging items to a new card and being issued a statement which prevents this happening. First things first and all that

CRISPIANNE3

brakepad wrote: »

Crikey, was trying to help some other people avoid the same hassle. Seems a bit underhand to me.

Nothing wrong in that but unfortunately in all walks of life you get the know alls. I am pleased when when someone like your goodself shares a bad experience in the hope I do not make the same mistake.

Don't be put off posting.

planteria

Herbalus is right.

i recently took out a Tesco card for the low BT deal. the first payment was made manually, form my Co-op Current Account. the second, and onwards, should be taken by DD from my Barclays Current Account. you have to cover your !!! when it comes to initial payments.

planteria

...but glad you posted. and good that you wanted to warn others.