Debit before credit - Is this Legal

mduap

I have had trouble with my Nationwide flexaccount for the last two months. I put £1500 from my own account in to the joint account to cover bills. This goes in on the first of each month, I also have some direct debits that go out the same day. The bank has taken the direct debits before they acknowldge that the 1500 has gone in. Then they have the cheek to charge me for having insufficient funds in the account. When I phoned the customer service team they told me that debits are always taken before credits and that it clearly states this in the terms and conditions of the account. Can anyone clarify that this is true. They have refused to refund the charges and I want to take this further but I want to check that it is there policy to take debits before credits. Can anyone help me out. Thanks!

Hazzanet

From the Nationwide FlexAccount T's and C's:

14. Payments (direct debits, cheques, standing orders or bill payments) from your account will only be made if there are enough cleared funds available in your account. If you need to transfer funds from another Nationwide account this needs to be done by 5.00pm on the working day before payments are due. We may decline to make a payment if the amount exceeds any limit we set for monitoring or fraud prevention purposes.

Emphasis mine.

masonic

This is the case with several banks, but people still seem to get caught out by it. Even if it wasn't in the T&Cs, you can't really assume a payment coming into the account would arrive at an earlier time during the night than a payment going out. One or two banks allow you time to pay in funds to cover last nights debits, but the rest don't.

saxmund

One solution is to arrange an overdraft, so if payments are debited before a credit, there is still money available in the account.

Dylanwing

It has happened to me, and I also got a garbled explanation of timings that I know from my Banking days was pure BS. They had a fantastic explanation of how debits go early and credits take longer. Thankfully they gave my charges back quickly and I changed payment dates to avoid it happening again.

BlondBoy

I'm sympathetic to the OP, but the debit before credit scenario makes sense, surely.

A credit starts its life as a debit from another account, so doesn't common sense say banks have got to do it in that order?

Penelope_Penguin

mduap wrote: »

I have had trouble with my Nationwide flexaccount for the last two months. I put £1500 from my own account in to the joint account to cover bills. This goes in on the first of each month, I also have some direct debits that go out the same day. The bank has taken the direct debits before they acknowldge that the 1500 has gone in. Then they have the cheek to charge me for having insufficient funds in the account. When I phoned the customer service team they told me that debits are always taken before credits and that it clearly states this in the terms and conditions of the account. Can anyone clarify that this is true. They have refused to refund the charges and I want to take this further but I want to check that it is there policy to take debits before credits. Can anyone help me out. Thanks!

This has just happened to me with Alliance and Leicester, and I'm hopping mad :mad: :mad: :mad: I wrote a cheque on Tuesday, expecting it would take a couple of days to clear. I transferred some money from my linked A&L account to hit my current account on Thursday. A&L have told me in the past that transfers between accounts are immediate, so I expected this account to take place at 1 second past midnight on Thursday, in advance of the cheque debit.

My statement shows the transfer in followed by the cheque out - at no time am I overdrawn. However, I've been charged £25 *unpaid item* fee. This will be followed by a further £25 overdraft fee plus interest. :mad: :mad: Over £50.

I've been told on the phone that debits are made first. This sounds crazy. It appears to me that A&L are shifting the goalposts. Any idea where I stand?

Many thanks, Penny. x

Dylanwing

Any idea where I stand?

In another Bank at the account opening window?

anniecave

I always make sure my debits go out at least a day after the credits go in.

If you have a current account paying a halfway decent credit interest rate then you are not losing that much money by having the money in your current account for an extra day (as opposed to in your savings account).

And I always set direct debits up for around the 5th of the month and I get paid at the end of the previous month so there are a few days in between.

I also have an overdraft (which so far I have never used. I also aim to keep a minimum of £200 in my current account just in case.

masonic

Penelope_Penguin wrote: »

I've been told on the phone that debits are made first. This sounds crazy. It appears to me that A&L are shifting the goalposts. Any idea where I stand?

If you stayed up until one minute past midnight and did it manually yourself through online banking, you probably would have been ok. Internal transfers between linked accounts do affect your available balance immediately, but only manual transfers are done at a time of your choosing. A&L do state quite clearly in their T&Cs:

20. Order of Transations

20.1 We do not have to carry out transactions on Your Account in any particular order.

Setting up transfers to cover debits going out overnight on the same night is just never a good idea.