Why UK banks require monthly “pay in” into current account?

stormdb

Many UK banks require minimal monthly "pay in" (often 500-1500 GBP) to get interest rate payed on their current accounts. Sometimes there is a restriction that payment must come from another bank (payments from other accounts in the same bank do no count). At the same time, as far as I know, there are no restriction for having several current accounts in different banks.

So it becomes quite easy to formally arrange the required "pay in" with having simple standing orders transferring money between one's accounts in different banks (like A->B; B->A). Of course this trick requires having at least 500-1500 GBP on those accounts.

The question is: why do banks still require that "pay in" if it can be easily implemented without actually paying additional money into the system? What is their reason? Where is the catch here?

grumbler

Do you really need to know 'why'?

I think they want to offer incentives for 'main' accounts only, but it's far too difficult to define 'main' formally and to keep checking this.

And what is "quite easy to formally arrange" for some people is in fact far too hard for the majority of UK population that is notorious for 'inertia' (to put it mildly) and unwillingness to change the things that they get used to.

That's why UK market is lopsided with never ending introductory offers for new customers at the cost of existing ones.

colsten

There is no catch if you just follow the T&Cs of any of these accounts.......other than for those who think you can / should have only one current account (or one bank), which is probably still the majority of adults in the UK. Banks will be trying hard to uphold the belief of that majority as that means they have a captive audience to sell loans, mortgages insurances, and credit cards to.

stormdb wrote: »

So it becomes quite easy to formally arrange the required "pay in" with having simple standing orders transferring money between one's accounts in different banks (like A->B; B->A). Of course this trick requires having at least 500-1500 GBP on those accounts.

It's not a trick, it's just something you can do, and what lots of people on here have been doing, for months and in some cases for years. Of course nobody will get paid for interest on money that isn't in their accounts at the end of each day.

A_Frayed_Knot

Have been "thinking" about this, so have made a move and moving, my only worry is if I move £500-£1000 from 'A' account to 'B' account then £500 - £1000 from 'B' account to 'A' account, what happens if B account moves it before A account moves it?

Or is it balance at close of business that day, which gives time for all transactions to be completed.

colsten

Simples: don't move money that you aren't 100% sure will be in the account at the time of moving. If in doubt, make manual faster payments rather than SOs.

anoncol

The real danger of SO is when different banks have different rule transferring weekends/holidays. Tesco being one apparently.

planteria

i think the real answer is not to worry about 'why', and just organise your own finances in the best way you can, for you, in the market that we have..

grumbler wrote: »

That's why UK market is lopsided with never ending introductory offers for new customers at the cost of existing ones.

i'm in the market for another Yorkshire Bank-style intro deal to which i can move 6 current accounts, grumbler:D

Eco_Miser

A_Frayed_Knot wrote: »

Have been "thinking" about this, so have made a move and moving, my only worry is if I move £500-£1000 from 'A' account to 'B' account then £500 - £1000 from 'B' account to 'A' account, what happens if B account moves it before A account moves it?

Or is it balance at close of business that day, which gives time for all transactions to be completed.

If you have sufficient money in both accounts, there's no problem.
If you have insufficient money in one of them, and that attempts to go first (SOs normally happen early morning of due day), then either the bank will let it go overdrawn, in which case the incoming SO will clear the overdraft, and you will not normally be charged (but check your T&Cs), OR the SO will fail and be retried later, by which time the incoming SO should have deposited sufficient funds (again check T&Cs for retry times and possible fees).
But as colsten says, do it manually and be sure the money's there.

darkidoe

A_Frayed_Knot wrote: »

Have been "thinking" about this, so have made a move and moving, my only worry is if I move £500-£1000 from 'A' account to 'B' account then £500 - £1000 from 'B' account to 'A' account, what happens if B account moves it before A account moves it?
Or is it balance at close of business that day, which gives time for all transactions to be completed.

I like the wheel and spokes SO method as preached by colsten. Basically use a current account with large balance as centre of the wheel, set up SO to transfer a set amount to the secondary account. Next set a SO to transfer the same amount back to the central account. The SOs can fall on the same day. Do this with all secondary accounts you may have with the central account. All in all, no net movement of balances but satisfy pay in requirements.