Cycling money though current accounts?

ashnojutsu

[FONT=Helvetica, Arial, sans-serif]I'm trying to figure out the safest (in terms of not incurring bounced S.O fees) and most efficient way to "cycle" money through my current accounts. I will have 8 current accounts, and the largest monthly pay-in amount is £1,750. To the best of my knowledge, there are 2 main approaches:

1) Cycle the £1,750 through each account via S.O, leaving 3 days between each S.O to account for weekends & bank holidays. Although I run the risk of an inbound S.O & outbound S.O occurring on the same day, so what happens in that scenario?

2) Use my main account as the hub, and do a same-day inbound & outbound S.O for each current account, leaving a 2 day gap between each S.O. This minimizes the risk for bounced S.O's as there will be enough to cover the payment in case S.O's happen to fall on the same day, or the inbound S.O payment does not land before the next payment date.

Am I missing something, rather than having £1,750 always sitting in my main account (Santander 123) not earning decent interest? I'm sure the veterans of this board will have some better ideas? [/FONT]

agrinnall

Yes, you have missed the obvious third alternative: don't use SOs at all, but do the transfers manually. That way you can be sure the money has arrived and can transfer it on or back straight away. No risk of a transfer taking place before funds are available. It's what I do, although not with quite as many accounts as you have.

ashnojutsu

Indeed I could, but somehow doing it manually seems archaic. Surely there has to be a foolproof automated method of cycling the payment? Or is it simply impossible to avoid missed payments with S.O's?

ashnojutsu

[FONT=Helvetica, Arial, sans-serif]Also, another question: If a inbound & outbound S.O occur on the same day for the same amount, will the outbound S.O still happen, even if there there was a zero balance the day before? Essentially, would I have to have enough funds in the account to cover the outbound S.O, regardless of the inbound payment? [/FONT]

youngretired

I have 19 accounts and move the money by standing orders for all of these via 2 round robins over a 3 day period (this can be done all on the same day but I do over 3).

i.e.Santander - Lloyds - Nationwide - BOS - TSB split x 2 - HSBC - Lloyds 2 - TSB split x 2 - Santander

I bounce my £1000 via accounts that already have funds sitting in them so if the standing orders go out before incoming then it doesn't matter as the end of day balance will always be correct. Also accounts that don't have the funds - if the standing order goes out before the incoming one is received then banks will either not pay it until the afternoon or pay it so your account shows in the minus, but you won't be charged a unpaid fee or overdraft as they give you until 2.30-3.30pm for funds to be in your account.

Obviously the funds have been received in the account but the banks systems work that outgoing payments are debited 1st before incoming hence paying standing orders in the afternoon. I do check these accounts if the payments fall on the weekend just to ensure funds have been received in case of a bank system error.

The reason I only do £1000 is because accounts that require extra i.e. Lloyds and HSBC I send individual standing orders to cover the Regular Savers and the extra required amounts and then bounce the extra back.

jimjames

ashnojutsu wrote: »

Indeed I could, but somehow doing it manually seems archaic. Surely there has to be a foolproof automated method of cycling the payment? Or is it simply impossible to avoid missed payments with S.O's?

The way to avoid missed payments is to maintain a balance greater than the transfer amount. Easy to do with some where you get interest but not with others like Halifax.
Manual might be archaic but at least you know the payments have happened.

ashnojutsu

youngretired wrote: »

I have 19 accounts and move the money by standing orders for all of these via 2 round robins over a 3 day period (this can be done all on the same day but I do over 3).

i.e.Santander - Lloyds - Nationwide - BOS - TSB split x 2 - HSBC - Lloyds 2 - TSB split x 2 - Santander

So you move the money into each account in turn, rather than from Santander into each account? And this could actually be all done on the same day, so each S.O activated on the same day? Wow!

youngretired wrote: »

I bounce my £1000 via accounts that already have funds sitting in them so if the standing orders go out before incoming then it doesn't matter as the end of day balance will always be correct. Also accounts that don't have the funds - if the standing order goes out before the incoming one is received then banks will either not pay it until the afternoon or pay it so your account shows in the minus, but you won't be charged a unpaid fee or overdraft as they give you until 2.30-3.30pm for funds to be in your account.

Obviously the funds have been received in the account but the banks systems work that outgoing payments are debited 1st before incoming hence paying standing orders in the afternoon.

Why do you have funds in each account if you won't be charged for bounced S.O's? Either the payment goes out in the afternoon, or you will be negative balance and then the inbound payment restores the balance (before 2:30pm hopefully), so as long you are not charged anything, what's the point of having extra funds in each account?

Nice system, I'm just trying to get my head round why you keep more money than necessary (I think) in the accounts?

YorkshireBoy

ashnojutsu wrote: »

[FONT=Helvetica, Arial, sans-serif]I will have 8 current accounts, and the largest monthly pay-in amount is £1,750. [/FONT]

£1,750 would suggest HSBC is in the equation. Are they all for regular savers or have you some high interest current accounts as well?

If you list which current accounts you have, including any attached regular savers you'll get some better pointers.

But if Santander is full, or fairly full, then the best approach is possibly the hub and spoke method, ie...

Santander feeds all other accounts by SO (for high interest accounts, make these all on the same day).

High interest current accounts feed back to Santander by SO, again on the same day.

For those accounts feeding regular savers, set up SOs or future dated FPs from Santander to suit the regular saver payment date.

The only manual work you then have to do is log into those accounts feeding regular savers and send the residue back to Santander.

The penalty for forgetting to log in for this last series of transfers is a loss of 3% (soon to be 1.5%) interest at Santander for a few days. On the upside, you're guaranteed not to miss out on the 6/5/4% interest the other accounts are paying.

youngretired

What I meant is the accounts that I have my savings in i.e. Lloyds £5000, TSB £2000, Nationwide £2500, BOS £5000 already have the funds in to cover a standing order of £1000 going out so the standing orders will natural get paid out 1st thing so the accounts will then just get reimbursed. I don't keep any extra in my accounts that won't get interest.

Others like Co-op, HSBC, FlexAccount and Barclays because I only keep about £50 in them these are the ones that will either be paid in the afternoon or show minus until incoming standing order received.

Beware though if you have Tesco current accounts these do debit on non working days so if you do fund these (though not required) then you must obviously have the funds in there before the standing orders go out.

Also do check your account T&C's re unpaid standing orders just in case their rules are different, though I would think they all are about the same just with different cut off times. If you have all the high interest rate accounts or rewards like I do, then I know these are OK.

ashnojutsu

Okay these are the accounts I am setting up:

HSBC Advance (£1750 monthly pay-in)
Nationwide Flexdirect (£1000 monthly pay-in)
Club Lloyds (£1500 monthly pay-in)
2 x BOS Vantage (£1000 monthly pay-in)
First Direct (£1000 monthly pay-in)
Co-Op (£800 monthly pay-in)
Halifax (£750 monthly pay-in)

No regular savers.

Either I cycle the £1750 through the accounts (splitting the amount once HSBC & Lloyds are done to quicken the cycle), or go with the hub & spoke configuration.

I get what you are saying YoungandRetired, but I won't be keeping money in HSBC, 1st Direct, Co-op, or Halifax, so the issue of bounced S.O's still remains.

Santander 123 is maxed out, YorkshireBoy. What do you guys think is the best approach?

TheShape

You don't need £1000 monthly pay-in to First Direct. A savings account (not the regular saver) is enough to avoid the monthly fee.