Cost of Lloyds DD processing delay

chiefdave

I have a Lloyds Avios credit card. Having received some money into my bank account (non Lloyds) I wanted to clear the balance.


For some reason Lloyds have no method through their internet banking to make a payment by debit card so instead I switched my direct debit from minimum payment to full balance. This was in mid Feb. I then received a letter from Lloyds confirming my direct debit had been altered.


Last week the payment was taken and they only took the minimum payment. This has caused interest charges of approx. £300. Obviously I wasn't too happy with that so I queried it with them and their response is that it takes two months to update a direct debit meaning the full balance won't be taken for a further month and another £300 of interest will be charge (£600 in total).


This seems crazy to me. I can login to my other credit cards (Barclaycard and Virgin) and either make an additional payment by debit card or adjust my direct debit pretty much instantly.


It seems to me Lloyds are creating a situation where you have no choice other than to incur additional interest charges. I will be firing in a complaint but I would be interested to hear the thoughts of others.

Tixy

Did the letter you recevied from lloyds confirm when the change would take effect from?

Was the last credit card statement generated before of after that letter was dated?

If the letter was generated before the statement and didn't mention any delay before it could be implemented then I would make a formal complaint and ask for any interest applied from the date of the DD to the date you actually pay in full to be refunded.

Presumably most of the £300 intere you mention you have been charged is the interest that would have been due anyway even if they had taken payment in full last week.

I would call and pay off the current balance by telephone today, and then leave the dd to collect the final balance for residual interest next month.

Alt

I don't understand why you didn't just pay the cc balance from your non Lloyds account via a bank transfer. The back of your monthly statement lists a number of ways to pay.


Also what did the letter you receive say exactly? Does it mention the time (2 months) it takes to update the direct debit?




Alt

SnowTiger

chiefdave wrote: »

Last week the payment was taken and they only took the minimum payment. This has caused interest charges of approx. £300. Obviously I wasn't too happy with that so I queried it with them and their response is that it takes two months to update a direct debit meaning the full balance won't be taken for a further month and another £300 of interest will be charge (£600 in total).

This seems crazy to me. I can login to my other credit cards (Barclaycard and Virgin) and either make an additional payment by debit card or adjust my direct debit pretty much instantly.

It seems to me Lloyds are creating a situation where you have no choice other than to incur additional interest charges. I will be firing in a complaint but I would be interested to hear the thoughts of others.

The main reason for the delay is that organisations taking payment by Direct Debit have to give noticed of when they will take it and how much it will be for.

Using simple dates, let's say your statement is produced on the 1st of the month and the Direct Debit is taken on the 25th of the month:

January's statement is produced on 1st January with notice that the minimum amount of, say, £100 will be taken by Direct Debit on 25th January.

On 2nd January you contact your bank to say you want pay off the full amount by Direct Debit in future.

They've already notified you that a Direct Debit of £100 will be taken on 25th January, so your new Direct Debit instruction will be actioned from your next statement.

On 1st February your February statement is produced. Direct Debit to be taken for the full amount on 25th February.

So, you contacted your bank on 2nd January about paying in full by Direct Debit, but the full amount isn't taken until 25th February. Nearly two months later.

Of course your bank could have actioned your request earlier and simply taken the full amount by Direct Debit on 25th January. However, you would have a statement, dated 1st January, saying that they would only take the minimum amount. That's what you wanted. Others might jump up and down and point toward the Direct Debit Guarantee.

Paully232000

chiefdave wrote: »

I have a Lloyds Avios credit card. Having received some money into my bank account (non Lloyds) I wanted to clear the balance.


For some reason Lloyds have no method through their internet banking to make a payment by debit card so instead I switched my direct debit from minimum payment to full balance. This was in mid Feb. I then received a letter from Lloyds confirming my direct debit had been altered.


Last week the payment was taken and they only took the minimum payment. This has caused interest charges of approx. £300. Obviously I wasn't too happy with that so I queried it with them and their response is that it takes two months to update a direct debit meaning the full balance won't be taken for a further month and another £300 of interest will be charge (£600 in total).


This seems crazy to me. I can login to my other credit cards (Barclaycard and Virgin) and either make an additional payment by debit card or adjust my direct debit pretty much instantly.


It seems to me Lloyds are creating a situation where you have no choice other than to incur additional interest charges. I will be firing in a complaint but I would be interested to hear the thoughts of others.

No, Lloyds have created a system whereby if you read the back of your statement (online or paper) there is a list of 5 ways to pay your CC. One of which gives you the sort code, account number, and reference number to use with any bank account you have to pay it off.

grumbler

chiefdave wrote: »

I have a Lloyds Avios credit card. Having received some money into my bank account (non Lloyds) I wanted to clear the balance.


For some reason Lloyds have no method through their internet banking to make a payment by debit card so instead I switched my direct debit from minimum payment to full balance. This was in mid Feb. I then received a letter from Lloyds confirming my direct debit had been altered.


Last week the payment was taken and they only took the minimum payment.

It takes time to change the DD. You can rely only on the information that you see in the statement or on the letter if it clearly said that a different amount would be taken on this particular occasion.

It seems to me Lloyds are creating a situation where you have no choice other than to incur additional interest charges.

Doesn't seem to me...
>Understanding your credit card statements
>>Making payments

chiefdave

Tixy wrote: »

Did the letter you recevied from lloyds confirm when the change would take effect from?

The letter confirmed the direct debit had been updated, there was nothing to indicate there woudl be any delay or that two further statements and payments before the change was actually implemented.

Tixy wrote: »

Was the last credit card statement generated before of after that letter was dated?

A further two statements have been generated after the letter, I got the distinct impression when I phoned that had I not enquired I would still be making minimum payments.

Tixy wrote: »

I would call and pay off the current balance by telephone today, and then leave the dd to collect the final balance for residual interest next month.

I've tried this twice now, once before changing the direct debit and again today and I get told they won't accept payment over the phone from a non-Lloyds account. As my bank account is with First Direct it appear phone payment is not an option. Changing the direct debit was their suggestion as the best way to pay the balance!

Alt wrote: »

I don't understand why you didn't just pay the cc balance from your non Lloyds account via a bank transfer. The back of your monthly statement lists a number of ways to pay.

Hindsight is a great thing and of course it now seems direct debit was not the best method yet is was the method recommended by Lloyds when they refused phone payment. Also I also cleared 2 other cards using the same method, both with no problems so I don't think it's the method itself at fault more Lloyds implementation of it.

SnowTiger wrote: »

The main reason for the delay is that organisations taking payment by Direct Debit have to give noticed of when they will take it and how much it will be for.

But the statements and subsequent minimum payments are for two months after the direct debit change. I could see if I had a statement on say 1st Jan and changed the direct debit after that they woudl still take the amount listed on the statement. However if I changed the direct debit on 1st Jan I think it's reasonable to expected statements generated mid January and mid February to work on the basis of the updated instruction. This is what has happened with my other 2 credit cards, I can't really see why Lloyds should be so different.

Paully232000 wrote: »

No, Lloyds have created a system whereby if you read the back of your statement (online or paper) there is a list of 5 ways to pay your CC.

Indeed it does, however it does not state a long delay for direct debit yet does state post and in branch payments will take longer than other methods. I would suggest it is not unreasonable to expect a change to a direct debit to be actioned in a shorter period of time than 2 months given the lack of any information indicating otherwise, especially when it is Lloyds themselves who have suggest this as the best method.

grumbler wrote: »

It takes time to change the DD.

Maybe I'm missing something obvious but I'm not sure why my 2 other credit card companies can make the change insantly yet Lloyds take so long.

grumbler wrote: »

Doesn't seem to me...
>Understanding your credit card statements
>>Making payments

And the first suggestion on that list is direct debit!
My point is nowhere in the process did they had given the slightest indication it would take so long. I have recieved 2 further statements and incurred over £600 in interest after changing my direct debit to pay the full balance on their recommendation.


I have tried to make payment by phone and been refused. I tried paying in my local branch only to find it had been closed down.


Fair enough I could have used a different form of internet banking but I don't think it's unreasonable with no indication to the contry to expect things to move quicker than they have.

chiefdave

Having just logged onto my Lloyds internet banking account there is a ways to pay tab.


This only gives me two options, firstly payments from a Lloyds current account. The second by direct debit. Here it gives me the option to change my direct debit yet makes no mention of any delay in implementing this, yet alone a delay of several months.

grumbler

chiefdave wrote: »

Maybe I'm missing something obvious but I'm not sure why my 2 other credit card companies can make the change instantly yet Lloyds take so long.

I think you either overestimate or misunderstand this.

Even cancelling a DD on the CC's side can take several days (Halifax).

"Please note that if you make any changes to the amount we collect within seven working days of your payment date, these changes may not take effect until your next payment is due. Also, any changes you make to your bank details within 12 working days of your next payment date may not take effect until your next payment is due."
(Barclaycard).

I have recieved 2 further statements and incurred over £600 in interest after changing my direct debit to pay the full balance on their recommendation.

2 statements are understandable if the balance started to get paid in full as requested.

However, I don't understand how the trailing interest for the last month was the same £300 as for the previous month.

chiefdave

grumbler wrote: »

I think either overestimate or misunderstand this.

Even cancelling a DD on the CC's side can take several days.
2 statements are understandable if the balance started to get paid in full as requested.

Well not literally instantly, the point being I changed 3 credit card direct debits on the same day. The other 2 used the latest information when drawing payments several days later, overriding the amount to be drawn by direct debit on the most recent statement.

A stark contrast to Lloyds who issued a further two statements and took 2 further payments (or 3 if you count the one that was listed on the statement prior to the direct debit change that had not yet been drawn at that point).

grumbler wrote: »

However, I don't understand how the interest for the last month was the same £300 as for the previous month.

It was quite a large balance causing my minimum payment to be fairly close to the amount of interest charged hence the overall balance was not being paid off. Maybe I'm not explaining it clearly. It follows this example:

1st Feb Statement: Balance £15K, interest £300 minimum payment of £300 to be paid by direct debit on 15th Feb

10th Feb: Direct debit changed to full balance

15th Feb: Direct debit draws payment of £300

1st Mar: Statement: Balance £15K, interest £300 minimum payment of £300 to be paid by direct debit on 15th Mar

15th Mar: Direct debit draws payment of £300

19th March: Enquired why minimum payment was still being taken, told change to direct debit requested on 10th Jan will not appear until statement on 1st May and then payment on 15th May.

1st Apr: Statement: Balance £15K, interest £300 minimum payment of £300 to be paid by direct debit on 15th Apr

15th Apr: Direct debit will draw payment of £300


Only at this point will my next statement (1st May) and subsequent payment (15th May) be on the new direct debit terms.

Hopefully that illustrates the issue better.

grumbler

chiefdave wrote: »

A stark contrast to Lloyds who issued a further two statements and took 2 further payments (or 3 if you count the one that was listed on the statement prior to the direct debit change that had not yet been drawn at that point).

If it really was the case then you really have a strong grounds for complaining and demanding refund/compensation. In the worst case scenario only the next payment after the change could be minimum.