Woman gets her daisy-chain SOs wrong

anoncol

Spidernick wrote: »

Indeed - don't most people have £2K in TSB (for example) to max out the interest in any case? Otherwise you have to ask: what is the point of having all those accounts?!

That what I don't get. Why have all the account when she isn't maximising any of them!

Eco_Miser

anoncol wrote: »

That what I don't get. Why have all the account when she isn't maximising any of them!

One reason could be to make sure she gets the accounts while they're available.
How many people regret not having got two sole TSB accounts for example.
Still, automatically paying out of an account that may be under-funded is careless. That's why I do it all manually.

colsten

anoncol wrote: »

That what I don't get. Why have all the account when she isn't maximising any of them!

May be she had only just added her first Tesco account? Perhaps to move over her money from her YB account, after that dropped from 4 to 2%?

Whatever her decision-making process was, I think she is probably representative of a large majority who don't really know how SOs work and how to avoid going overdrawn. I don't have much sympathy for her though - as a retired lady she should have enough time to keep an eye on her finances, and may be even to find MSE where the Tesco "anomaly" has been discussed plenty of times (I assume, perhaps wrongly, that she is not an MSE forumite). She should also be old enough to know that you shouldn't commit to any payments unless you can be sure you have enough funds.

Is the Telegraph extremely desperate to find the story newsworthy? "Mature woman can't manage her bank accounts. Bank waives charges". WOW.

Klopek

I use Tesco bank to fund current accounts that are linked to Regular Savers. As these current accounts don't have any money in them (as they don't pay interest), there's a chance the chain could break and leave me caught out.

I've currently got Tesco funding the account one day before the SO into the RS is due. As Tesco process SOs at weekends this has always worked fine but I am still paranoid. Is anybody else doing this and have you found a calendar situation or processing times of any particular banks which can cause this to fall apart? I'm wondering if it would be beneficial to add an additional buffer day to ensure the SO is received at the expense of another days interest?

Many thanks.

Man_on_fire

I think the minimum time between standing order payments on underfunded accounts would be 5 days to stop the risk of this happening.

YorkshireBoy

Klopek wrote: »

I use Tesco bank to fund current accounts that are linked to Regular Savers. As these current accounts don't have any money in them (as they don't pay interest), there's a chance the chain could break and leave me caught out.

I've currently got Tesco funding the account one day before the SO into the RS is due. As Tesco process SOs at weekends this has always worked fine but I am still paranoid. Is anybody else doing this and have you found a calendar situation or processing times of any particular banks which can cause this to fall apart? I'm wondering if it would be beneficial to add an additional buffer day to ensure the SO is received at the expense of another days interest?

You say it's worked well so far? So rather than waste an (albeit very small) interest opportunity each and every month, why not get a small (£250-300 should do) overdraft facility on those current accounts for the rare occasions where you could get caught out?

Having said that, if I was in your situation I'd be doing those transfers manually...either via immediate FP or future dated (a couple of weeks before after consulting a calendar) FP.

Klopek

YorkshireBoy wrote: »

Having said that, if I was in your situation I'd be doing those transfers manually...either via immediate FP or future dated (a couple of weeks before after consulting a calendar) FP.

Thanks for that. Is there any difference between a future dated FP and a SO? I thought SOs were routed through FPs.

anoncol

Klopek wrote: »

Thanks for that. Is there any difference between a future dated FP and a SO? I thought SOs were routed through FPs.

But it's a one off rather than day x every month where you don't know what day it is.

Archi_Bald

Klopek wrote: »

Thanks for that. Is there any difference between a future dated FP and a SO? I thought SOs were routed through FPs.

Good Q. I don't know the answer as I have never used a future date FP.

May be, if they do get executed on the actual date, they could be useful. Although you would have to set up umpteen future dated FPs, and remember when they run out.......it seems a lot easier to just use SOs, and to make sure you have enough money in your account on the day the SOs are due. Sorry if this sounds like teaching grandma to suck eggs.

norm_

Why didn't her Tesco account have sufficient funds if she was using it to earn interest on 3K.

Either way don't use SOs unless you have sufficient funds or leave a big enough gap.