123 Santander Current Account

Pincher

colsten wrote: »

The monthly direct debit that is being discussed in this thread is not paid from the Tesco current account but from a Tesco savings account.

You are discussing a DD from a Tesco savings account, taking money from a Santander 123 current account. This is not that much different from a DD from a Tesco credit card, taking money from Santander.


The difference is, you are paying off the monthly minimum using the money Tesco lent you for free. Whilst you have the money, whether it's in a Santander 123 account, or a Tesco current account, you are generating income. The process keeps the DD active, so no one can complain.


You do need to have a worthwhile balance to transfer in the first place, of course.


Regular repayments can be good for your credit history, but I have also heard that there is a minimum flag which warns that you are paying minimum amounts. One of these days, they are going to have a habitual stoozer flag, like Vegas treat card counters. I'll bet.

bigfreddiel

Eco_Miser wrote: »

Tesco didn't make the rules either, and it's them who are being abused.
A lot of banks and building societies have stopped the DD facility, probably because of mis-use. If Tesco get fed up of processing lots of DDs for tiny amounts, supposedly for regular savings, a LOT of people are going to have to use real DDs for their savings current accounts. It's not like using miniscule amounts produces any real saving.

You are correct, but it's up to each organisation to set the minimum amount for a DD so I still say go as low as you can. It's really not us who make up the rules.

Cheers fj

Eco_Miser

bigfreddiel wrote: »

You are correct, but it's up to each organisation to set the minimum amount for a DD so I still say go as low as you can. It's really not us who make up the rules.
Cheers fj

And I still say there's no point in going as low as you can, since it's still your money; whereas if too many people abuse the system with uneconomic DDs, the goose that lays all our golden eggs will be killed.

TheTracker

Eco_Miser wrote: »

That's ridiculously low, Tesco might start objecting, make it £1 at least. Remember these transfers do cost the banks something, and you get them for free.

I've read this a few times in order to establish what on earth it means.

How much do you think it costs a bank to provide each Direct Debit? If it was processing 100k vs 1m transactions a day do you think the costs would be any different? Do you think the transaction amount has any bearing, and particularly as you seem to be saying, an inverse relationship?

Archi_Bald

TheTracker wrote: »

How much do you think it costs a bank to provide each Direct Debit?

I don't know any numbers but it won't be free

TheTracker wrote: »

If it was processing 100k vs 1m transactions a day do you think the costs would be any different?

it is obvious to anybody who has a smidgen of understanding of IT that processing 1m transactions costs more than processing 100K transactions. It is probably not a linear increase in cost but it won't come for free.

TheTracker wrote: »

Do you think the transaction amount has any bearing, and particularly as you seem to be saying, an inverse relationship?

most definitely it has the potential as it is pretty obvious that tiny transactions are taking the mick. And for what purpose? The money is all yours if you use Tesco accounts, anyway.

lejog2003

Archi_Bald wrote: »

I don't know any numbers but it won't be free it is obvious to anybody who has a smidgen of understanding of IT that processing 1m transactions costs more than processing 100K transactions. It is probably not a linear increase in cost but it won't come for free.
most definitely it has the potential as it is pretty obvious that tiny transactions are taking the mick. And for what purpose? The money is all yours if you use Tesco accounts, anyway.

Direct Debits are administered by BACS and they have a non-trivial charge per transaction, as well as the internal costs of the institution for processing more transactions

TheTracker

lejog2003 wrote: »

Direct Debits are administered by BACS and they have a non-trivial charge per transaction, as well as the internal costs of the institution for processing more transactions

All DDs are funnelled through BACS which has 13 members. They charge a flat £50k per institution or £650k pa total. In 2014 BACS collected £2.6m in transaction fees from these members. In 2014 3643 million DD transactions were processed. Basic maths therefore shows an average per transaction cost of 0.0007p per transaction, or to put it another way, 1400 DD transactions per pound. If you include the 650k member fees then it's .0009p and 1100.

"Non trivial"?

Other banks have to pay these members to process DDs.

Yes, the banks themselves will have a cost, particularly the ones like Tesco that allow Joe Public to create a DD. Imagine it is 100 times as large as the BACS fees. That means each DD even with this massive assumption costs less than a 10th of 1p. FWIW my "gut feel" before searching for stats was 0.1p. I reckon a fair assumption it's less than 1p.

Myth Busted?

Archi_Bald wrote: »

it is obvious to anybody who has a smidgen of understanding of IT that processing 1m transactions costs more than processing 100K transactions. It is probably not a linear increase in cost but it won't come for free.

It seems to me that the BACS fee on 100k transactions would be £70 and 1m at £700 even if it was linear. Of course there are other internal costs.

References:

http://www.bacs.co.uk/Bacs/DocumentLibrary/Bacs_processing_stats.pdf
http://www.bacs.co.uk/Bacs/DocumentLibrary/Bacs_membership_costs.pdf

avoniel

If I set up a joint account with my wife and I invest 20k and she same amount will we both get the 3%. Also does she also need two direct debits.

colsten

avoniel wrote: »

If I set up a joint account with my wife and I invest 20k and she same amount will we both get the 3%. Also does she also need two direct debits.

Each 123 account pays max 3% AER interest on max £20K and needs 2 DDs (amongst other things) if you want interest to be paid. You can hold the account in sole or in joint names. Holding it in joint names will not double up on any of the rules.

xylophone

If I set up a joint account with my wife and I invest 20k and she same amount will we both get the 3%. Also does she also need two direct debits.

£20,000 in the joint, £20,000 in the sole and both accounts require a minimum of two direct debits.