Where does your money go?

jonesMUFCforever

And for every person it 'benefits' there will be 2 or 3 who will be worse off - ie the victims of fraud - transfers made same day between banks and cashed and gone!

nomoneytoday

It sits on a non-interest bearing suspense account...

emmalt

For two nights the money is held by the bank as part of its float which is invested on the money market earning interest at the Sterling overnight Libor rate - currently 3.98%. In practice the money is there for longer because the banks stretch the three day cycle.

This is a direct quote from BBC's Money Box.

emmalt

ejones999 wrote: »

And for every person it 'benefits' there will be 2 or 3 who will be worse off - ie the victims of fraud - transfers made same day between banks and cashed and gone!

?

Every customer would benefit so by my calculation you are saying that 1 out of 3 or 4 are NOT the victim of fraud?

jonesMUFCforever

I organise my finances in such a way that clearing cycles do not come into the equation.
I pay my bills online (or by D/D) in good time.

I will not be getting into the habit of leaving it to the last minute before paying something because it will be nearly instant.

I repeat anyone being the victim of phishing or fraud will lose out a lot more than the so called benefits you talk about.

emmalt

ejones999 wrote: »

I organise my finances in such a way that clearing cycles do not come into the equation.
I pay my bills online (or by D/D) in good time.

So do I.

I will not be getting into the habit of leaving it to the last minute before paying something because it will be nearly instant.

Neither will I. I schedule my payments (if they are not DD) when I receive the bill but they go out of my account 4 days before they are due. When the banks change the I will schedule them to leave my account two days in advance. That way I maximise the (little) interest I can earn but leave enough time for the payment to arrive.

I repeat anyone being the victim of phishing or fraud will lose out a lot more than the so called benefits you talk about.

If you are not checking your bank statements everyday on line you are always at risk of fraud. You have to weigh up the risks in everything in life. You cannot live your life worrying about everything. I shred, ignore phishing emails (well I have not actually had one yet), protect my PIN, password, etc. I tell my bank/credit card companies if I am going abroad on holiday.

The point is that banks did not need to sit on payments for three days to clear them. They do not do it to help combat fraud. The only reason they did it was because they realised that they could earn interest. Make money. Increase profits. Make shareholders happy. The £35m they have been making each year was from money that didn't really belong to them. Put it this way, how would you like it if you gave a friend money to pay another friend and they popped it into a savings account for a few days before they passed it on.

Charis

ejones999 wrote: »

1) And who pays for the equipment and staff needed to run the system to enable your card to work (which is sent to you free of charge!) ?

2) If you are too close to your credit limit only one person is responsible and it is not the bank!

1) We all pay for the system. Every time you use the supermarket 2.5% is included in your bill for visa transaction charges regardless of whether you pay by visa or cash. Our local theatre charges an extra £2.50 per transaction if you pay by visa. Visa companies already charge retailers for the convenience and security of electronic payments. Without customers the visa system would be a dead duck.

2) I would be nowhere near my credit limit if the money which has already been taken from my account had gone straight to my visa company. Instead it is hidden somewhere and I don't believe no-one has thought to benefit from the interest on £millions hiding in limbo land everyday. When I realised the situation and offered to pay some immediately by electronic transfer from my bank, I was told that too would take four days to clear, by which time it would be too late and I would be over the credit limit.

jonesMUFCforever

1) It is the stores who pay for their own systems not the banks; who run the infrastructure. Some incorporate it into their everyday pricing (cheaper and more convienient than cheques and cash which are expensive to process) others levy a seperate charge.
Everyone to themselves I do not have a problem with that.

2) Please read the back of your statemnt - you will find how many days in advance you need to pay and how long it takes for your payment to reach them.
If you are so near your limit before making a payment I would suggest not spending any more on that card and instead concentrate on repaying.If you don't like the system don't use it!
Pay for everything in cash - you then won't get any charges!

Primrose

I agree it's a scandal that the time it takes to process a credit card payment can sometimes involve in a late payment penalty, often unjustly. The only way to get round this is to set up a direct debit to pay the minimum amount due every month, or to pay it off in full if you can afford it. Obviously if you can afford to pay off more than the minimum you can do this separately and it's desirable to do so, but a direct debit should ensure that at least you avoid late payments in future.

dunstonh

I agree it's a scandal that the time it takes to process a credit card payment can sometimes involve in a late payment penalty, often unjustly.

Why?

The credit card statement gives you the date they need payment and gives a range of payment options with typical delays with each method. The only individual at fault for missing that date is yourself.

The delay is not a good execuse as it isnt as if the delay is something new. Plus, the OP could have paid by debit card if they had left it late. That would have saved the a lot of time.