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Has this happened to anyone else?
Rebecca_O
Posts: 1 Newbie
Quite a story (posted on tumblr) about how I have ended up paying First Direct nearly £700 in unauthorised overdraft charges this year, DESPITE being on the ball with managing my money. Has this happened to anyone else? (Sorry this is long - I have posted it on tumblr but can't link as I am a new member)
Has this happened to you?
I have paid nearly £700 this year in unauthorised overdraft fees. !!!!less, you say? No. A mother on a tight budget who is very aware of her monthly outgoings and spends almost 0 on non-essentials. Stupid? No. In fact, I’m a personal finance journalist - I know about this stuff. Disorganised? Well, maybe sometimes, but I’ve been as vigilant as humanly possible this year with my money, and yet still been caught out almost every month.
So how have I managed to incur these charges? Well, being part time and having a young family, a mortgage, nursery fees etc, like a lot of people, I don’t have much left at the end of the month. But I can normally juggle things around and move money back from our joint house account to my sole account to get through the last few days before pay day.
I receive text alerts from my bank when I get within £500 of my limit and I check my bank balance every day in the last week of the month, in the evening, to ensure I am still in the black. I am very aware of what my bank balance is doing. Except, it seems, late at night.
My bank is still managing to wheedle these hefty charges out of me on a monthly basis. And the charges that have been levied by my bank, First Direct, have been applied when payments, which I might have made three days before, come out in the evenings, after I have checked my bank balance but before (what I now know is the cut off point for debit payments to be made) 9pm.
I incur a £25 charge if I am overdrawn by one day. So if, as yesterday, I check my bank balance at 8pm, then go to bed feeling reassured, I might still wake the next day to find I have gone over my limit and had a £25 fee whacked on there because a payment I made last Friday came out some time between 8 and 9pm.
This is a consequence of real time banking. Or, it’s real time, except when it is delayed by three days, and you never know which payment is going to going to be instant and which delayed.
Did you know that if you check your account at 6pm, a payment you made three days before could still come out in the next 3 hours? And did you know that it might not show up as a pending payment at 6pm, when you might be looking at your bank balance and thinking that must be it for the day? And did you know that if you don’t rectify it before 11pm that night but discover it instead at 7am the next morning, you will be charged by your bank for the misdemeanour, (in my case, £25?)
I receive text message alerts from First Direct to try and avoid this happening. I had a long conversation with the bank last month about what else I can do to avoid them. But, it seems, unless you have a forensic memory of every single debit card payment you have made in the last few days, you can still be stung, simply by some clever payment timing by the banks - ie. take it in the evening, so it might be missed, rather than in the morning, so someone checking their statement during the day would pick it up. Excuse me for wondering out loud, but how much are the banks making in unauthorised overdraft fees from these delayed, unexpected and unwarned about late night debit card payments, which can vanish from even the most vigilant customer’s account within seconds of the 9pm deadline to take them over their limit by the next morning?
And forgive me for thinking that First Direct - and perhaps other banks - deliberately doesn’t offer a real-time alert service, so that if you go beyond your limit in the evening, you get an instant text, so you can rectify it before the 11pm deadline and avoid the £25 charge?
I can’t think why, if my bank can text me when I am close to my limit, it cannot also text me when it knows I have gone over my limit, apart from because it makes a shed load of money out of me in that space between the morning text and the 9pm payment deadline and the gap in my knowledge of what has and hasn’t already come out of my bank account from payments made in the last few days.
First Direct says it can only send me the alert texts in the morning. If it simply sent them to me at 10pm at night, after everything that could have come out of my account has done, but before an unauthorised fee has been applied, I could avoid all these fees.
But it is my view that the real time payments system and alert system set up by banks, supposedly to help you avoid these fees, actively leads you into the trap of having them applied.
So you get a text on a Monday morning saying you have £150 left before you hit the limit. But what you don’t know is that those two petrol payments you made at the weekend haven’t come out yet. You check your balance again at 8pm that night, but they still haven’t come out yet. Then, at 7am the next morning, you get a text from your bank saying you have gone over your limit, and that’s £25 please. Well, blow me down!
Forgive me for saying, but this sneaky payment timing is jiggery pokery at its worst. It’s deliberately misleading. Yes, Ombudsman, I believe that in a world where some payments occur in real time but some are delayed for days then come out at 9pm, without any prior warning or notification, that managing current accounts these days, especially at the end of the month, is a complete minefield, and that if my bank’s actions are anything to go by, people who are perfectly good at managing money but might not necessarily sit staring at the online account all day until 9pm, are being royally shafted.
When I checked my balance at 8pm last night, the payments that sent me over did not even show up as pending on my account. My online banking system confidently told me what my available balance was, and I could have had no reasonable inkling, therefore, that making the transfer I made would the next day result in a fee, And yet it did.
Like many other people, my problem is not extreme financial difficulty - I have the money to stay within my limits, just not always in the right account. I am usually, like millions of people, just cutting it a little bit close to the bone at the end of the month. And it is here, in the final few days every month, where I have to make the odd transfer between accounts, that First Direct gets me every time.
It is apparently still possible to reclaim unauthorised overdraft fees if you are in financial difficulty. Well, technically I am not so if I claimed, it probably would be turned down.
Yet even so, I think it is important to highlight this payment timing sleight of hand, which must be raking in millions for the banks, where they can appear as if they are doing all they can to keep you in the black by sending you balance text alerts, then at the last possible minute that day, pushing through debit card payments, when you have very little real chance of knowing about them and before you really have the chance to do anything about them.
If I could set up a new bank charges campaign it would be this: All debit card payments to be taken from customers’ accounts in the morning so that they have all day to find out and do something about it. And banks to offer a text alert service, real time, at the point when someone goes over their unauthorised limit.
It is my guess that these two measures, which are not impossible to implement, would save banking customers like me millions of pounds a year collectively. But with the banks making so much money from it, do you think it will happen
Has this happened to you?
I have paid nearly £700 this year in unauthorised overdraft fees. !!!!less, you say? No. A mother on a tight budget who is very aware of her monthly outgoings and spends almost 0 on non-essentials. Stupid? No. In fact, I’m a personal finance journalist - I know about this stuff. Disorganised? Well, maybe sometimes, but I’ve been as vigilant as humanly possible this year with my money, and yet still been caught out almost every month.
So how have I managed to incur these charges? Well, being part time and having a young family, a mortgage, nursery fees etc, like a lot of people, I don’t have much left at the end of the month. But I can normally juggle things around and move money back from our joint house account to my sole account to get through the last few days before pay day.
I receive text alerts from my bank when I get within £500 of my limit and I check my bank balance every day in the last week of the month, in the evening, to ensure I am still in the black. I am very aware of what my bank balance is doing. Except, it seems, late at night.
My bank is still managing to wheedle these hefty charges out of me on a monthly basis. And the charges that have been levied by my bank, First Direct, have been applied when payments, which I might have made three days before, come out in the evenings, after I have checked my bank balance but before (what I now know is the cut off point for debit payments to be made) 9pm.
I incur a £25 charge if I am overdrawn by one day. So if, as yesterday, I check my bank balance at 8pm, then go to bed feeling reassured, I might still wake the next day to find I have gone over my limit and had a £25 fee whacked on there because a payment I made last Friday came out some time between 8 and 9pm.
This is a consequence of real time banking. Or, it’s real time, except when it is delayed by three days, and you never know which payment is going to going to be instant and which delayed.
Did you know that if you check your account at 6pm, a payment you made three days before could still come out in the next 3 hours? And did you know that it might not show up as a pending payment at 6pm, when you might be looking at your bank balance and thinking that must be it for the day? And did you know that if you don’t rectify it before 11pm that night but discover it instead at 7am the next morning, you will be charged by your bank for the misdemeanour, (in my case, £25?)
I receive text message alerts from First Direct to try and avoid this happening. I had a long conversation with the bank last month about what else I can do to avoid them. But, it seems, unless you have a forensic memory of every single debit card payment you have made in the last few days, you can still be stung, simply by some clever payment timing by the banks - ie. take it in the evening, so it might be missed, rather than in the morning, so someone checking their statement during the day would pick it up. Excuse me for wondering out loud, but how much are the banks making in unauthorised overdraft fees from these delayed, unexpected and unwarned about late night debit card payments, which can vanish from even the most vigilant customer’s account within seconds of the 9pm deadline to take them over their limit by the next morning?
And forgive me for thinking that First Direct - and perhaps other banks - deliberately doesn’t offer a real-time alert service, so that if you go beyond your limit in the evening, you get an instant text, so you can rectify it before the 11pm deadline and avoid the £25 charge?
I can’t think why, if my bank can text me when I am close to my limit, it cannot also text me when it knows I have gone over my limit, apart from because it makes a shed load of money out of me in that space between the morning text and the 9pm payment deadline and the gap in my knowledge of what has and hasn’t already come out of my bank account from payments made in the last few days.
First Direct says it can only send me the alert texts in the morning. If it simply sent them to me at 10pm at night, after everything that could have come out of my account has done, but before an unauthorised fee has been applied, I could avoid all these fees.
But it is my view that the real time payments system and alert system set up by banks, supposedly to help you avoid these fees, actively leads you into the trap of having them applied.
So you get a text on a Monday morning saying you have £150 left before you hit the limit. But what you don’t know is that those two petrol payments you made at the weekend haven’t come out yet. You check your balance again at 8pm that night, but they still haven’t come out yet. Then, at 7am the next morning, you get a text from your bank saying you have gone over your limit, and that’s £25 please. Well, blow me down!
Forgive me for saying, but this sneaky payment timing is jiggery pokery at its worst. It’s deliberately misleading. Yes, Ombudsman, I believe that in a world where some payments occur in real time but some are delayed for days then come out at 9pm, without any prior warning or notification, that managing current accounts these days, especially at the end of the month, is a complete minefield, and that if my bank’s actions are anything to go by, people who are perfectly good at managing money but might not necessarily sit staring at the online account all day until 9pm, are being royally shafted.
When I checked my balance at 8pm last night, the payments that sent me over did not even show up as pending on my account. My online banking system confidently told me what my available balance was, and I could have had no reasonable inkling, therefore, that making the transfer I made would the next day result in a fee, And yet it did.
Like many other people, my problem is not extreme financial difficulty - I have the money to stay within my limits, just not always in the right account. I am usually, like millions of people, just cutting it a little bit close to the bone at the end of the month. And it is here, in the final few days every month, where I have to make the odd transfer between accounts, that First Direct gets me every time.
It is apparently still possible to reclaim unauthorised overdraft fees if you are in financial difficulty. Well, technically I am not so if I claimed, it probably would be turned down.
Yet even so, I think it is important to highlight this payment timing sleight of hand, which must be raking in millions for the banks, where they can appear as if they are doing all they can to keep you in the black by sending you balance text alerts, then at the last possible minute that day, pushing through debit card payments, when you have very little real chance of knowing about them and before you really have the chance to do anything about them.
If I could set up a new bank charges campaign it would be this: All debit card payments to be taken from customers’ accounts in the morning so that they have all day to find out and do something about it. And banks to offer a text alert service, real time, at the point when someone goes over their unauthorised limit.
It is my guess that these two measures, which are not impossible to implement, would save banking customers like me millions of pounds a year collectively. But with the banks making so much money from it, do you think it will happen
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Comments
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Like many other people, my problem is not extreme financial difficulty - I have the money to stay within my limits, just not always in the right account.
So, it isnt financial hardship. It is a lack of financial management.It is apparently still possible to reclaim unauthorised overdraft fees if you are in financial difficulty. Well, technically I am not so if I claimed, it probably would be turned down.
Not quite. It is in financial hardship. Not financial difficulty. If you get into arrears and have missed payments and are constantly over limit and going in the wrong direction then the banks are encouraged to help people in that situation as a goodwill gesture.then at the last possible minute that day, pushing through debit card payments, when you have very little real chance of knowing about them and before you really have the chance to do anything about them.
Again, this indicates poor money management. The bank doesnt know when you have gone and spent money on your debit card. It wont know that a payment is coming until it arrives or it is one that is approved. Even then, that transaction could take 1 day, 1 week or months to arrive on your account. The bank doesnt control that. You know what you are spending better than the bank. So, how is that you dont know that a debit card transaction is coming when it is you that is creating the debit card transaction?If I could set up a new bank charges campaign it would be this: All debit card payments to be taken from customers’ accounts in the morning so that they have all day to find out and do something about it.
Instant fail as a) most banks operate this way already. b) most banks require you to have money in the account the day before. Only a few allow it same day. c) if the transaction hasnt hit the bank yet then you know it is coming. So, it is YOUR responsibility to have the money in the account. d) banks are moving to real time banking. So, there will eventually be no grace period at all.It is my guess that these two measures, which are not impossible to implement, would save banking customers like me millions of pounds a year collectively. But with the banks making so much money from it, do you think it will happen
Surely the easier thing is to control your finances better rather than paying the bank to do it for you which you are currently doing.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
As a suggestion, if you did your spending on a credit card INSTEAD OF a debit card, you would know each month what exact amount was going to leave your account and (pretty closely) the day that will happen. Then you can factor this as a known expense with known timing and get your money in the right place at the right time.
Hope this helps...Friendly greeting!0 -
...So you get a text on a Monday morning saying you have £150 left before you hit the limit. But what you don’t know is that those two petrol payments you made at the weekend haven’t come out yet. ...
Well you could check your balance online to find out....You check your balance again at 8pm that night, but they still haven’t come out yet. ...
See, I told you. You now know those payments haven't come out yet....Then, at 7am the next morning, you get a text from your bank saying you have gone over your limit, and that’s £25 please. Well, blow me down!....
Can't see why that's such a surprise. You worked that out at 8pm last night.
P.S. £150+ spent on "two petrol payments" over one weekend. That's a lot of petrol. How big a car have you got?:)
P.S.S. Yes, I know this isn't helpful.0 -
......................
Stupid? No. In fact, I’m a personal finance journalist - I know about this stuff. Disorganised? Well, maybe sometimes, but I’ve been as vigilant as humanly possible this year with my money, and yet still been caught out almost every month............
......
But it seems, unless you have a forensic memory of every single debit card payment you have made in the last few days, you can still be stung.............
Forgive me for asking this but is it not possible to be a "personal financial journalist" and stupid at the same time? Are they mutually exclusive?
Being a journalist you will be familiar with pen and paper. You will also be, I hope, able to perform simple arithmetic.
If you are unable to remember what you spend, the only way to keep an accurate record of your available funds is to record each transaction in a notebook and keep a running balance.
Only you know what you spend.0 -
I've been with First Direct for 10 years now and have never once had this happen. I keep a written record of what's going in and out of my account which is what I go by rather than the banks idea of my balance, and make sure there is enough in to cover any payments going out. I also have a written record of all direct debits and the date they're going out so I know to make sure that the funds are in there to pay them when they're due.
I do the same with my other accounts as well and have never once incurred any bank charges.
It's not difficult really...!0 -
Cash flow forecasting
At the start of the month transfer enough money in to cover DD , then a sum to cover other spends . As soon as you buy something deduct this from your balance , and when you've run out of money stop spending .
Its not difficult , I run a business with a £2 million turnover using cashflow spreadsheetVuja De - the feeling you'll be here later0 -
I have two accounts. One for all the bills which I call number 2 account (although historically these were known as budget accounts or cashflow accounts). On one day in the month an amount gets transferred by standing order to the bills account. Everything left in the number 1 account is available to spend. I then use MS Money to reconcile spending once a week (which is just a front end to a spreadsheet). Never had a bank charge.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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So, you're a personal finance journalist, and you "know about this stuff" ?
I beg to differ. It's not rocket science, the banks don't "take your money", the retailers process the transactions. Which is completely outside the banks control. The debits only appear once a retailer has processed them. It can take a day, it can take a month. Or even longer.
Your massive rant at the charges you are paying just highlights how much you don't "know this stuff"
We all lead busy lives, working, kids, etc. If you don't want to pay charges, keep your own records. It will pay you in the long run. You have a choice, pay or don't pay, it's YOUR choice, NOT the banks.0
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