smart/conditional direct debits?

LarryDuracell

I have accounts with two traditional banks, A (current account, credit card) and B (credit card). I pay both credit cards off from my current account at Bank A.

In the past, I have set my direct debits to pay the full credit card debt. When I have not had the full sum in my current account, this causes a problem: the direct debit fails, the bank adds a credit event to my record...

I am therefore looking for a bank that allows me to set a simple conditional direct debit statement: "If I have enough money to pay the full amount, pay the full amount; otherwise, pay the minimum".

Does anyone know of an account (or interface/API) that allows this?

(Eventually, I'd also like 'smart' balancing features that allow me to repay accounts with higher interest rates first - but one step at a time.)

Ta!

EarthBoy

LarryDuracell wrote: »

I am therefore looking for a bank that allows me to set a simple conditional direct debit statement: "If I have enough money to pay the full amount, pay the full amount; otherwise, pay the minimum".

Does anyone know of an account (or interface/API) that allows this?

The only way that this could work is if you have your credit card with the same bank as your current account, because only they would know how much the full and minimum payments are. Even then, I don't know of any bank which offers this facility. Other banks only know the amount being requested, they would have no idea whether this is the minimum, maximum, or something in between.

LarryDuracell wrote: »

(Eventually, I'd also like 'smart' balancing features that allow me to repay accounts with higher interest rates first - but one step at a time.)

All credit cards in the UK should use your payments to clear balances with the higher interest rate first.

eskbanker

While not actually a solution to your issue, a regularly suggested workaround is to have the DDs set to pay the minimum and for you to manually add whatever you wish to pay over and above that.

LarryDuracell

Thanks @eskbanker - I'm trying to minimise the amount of time I spend online checking in on my bank accounts - I end up being a month delayed, discovering I've missed something...

18cc

There are no banks that do what you want, although I do see what you are trying to do. The only think I can suggest workarounds (and I appreciate you may not want to do it):

1. use your debit card not credit card and keep an eye on your bank balance, or

2. have a large enough overdraft facility in place such that if you do go overdrawn paying off the card then you won't get a credit event like unauthorised overdraft

3. transfer a sum each month a second account eg Monzo and use this for spending.

londoninvestor

EarthBoy wrote: »

The only way that this could work is if you have your credit card with the same bank as your current account, because only they would know how much the full and minimum payments are

A tool that used Open Banking to get the details from each credit card and current account should be able to do this - that would be a pretty neat product in fact, if anyone wants a startup idea

onwards&upwards

Sorry to say, but the answer to your problem is to budget better. You should never be putting anything on your credit card if there’s any doubt about whether you can pay it off when the statement comes due.

Try YNAB to get you on track.

LarryDuracell

thanks @londoninvestor: do you know of any London-based fintechs who'd be in a position to implement this, whether as a standalone, or as part of an existing platform? I'd use it.

LarryDuracell

@onwards&upwards: the frustrating part of the current situation - and the inspiration for my question - is that I have always had enough to make minimum payment, so have been unable to understand why direct debits cannot simply revert to "minimum" from "full" when I've not had enough to make full payments.

Zanderman

LarryDuracell wrote: »

@onwards&upwards: the frustrating part of the current situation - and the inspiration for my question - is that I have always had enough to make minimum payment, so have been unable to understand why direct debits cannot simply revert to "minimum" from "full" when I've not had enough to make full payments.

If you can't understand that then you're not understanding direct debits.

For a DD the receiving account/bank has to request the payment from the paying account/bank. It's a simple request for money, pre-authorised by you (by setting up the DD originally). It's a withdrawal, that's all.

There's no feedback mechanism that could be put in place for the paying account to say, there's not enough here, can you try with a differing amount. The amount requested is set, by the receiving account, according to YOUR instructions. Which are , for a credit card, either minimum or full amounts. Not either/or.

A DD simply cannot do either/or - as a DD is just a request for one sum of money. Either/or would need a completely new system.

If you want something more sophisticated you'll have to wait for it to be invented.

Meanwhile you should just manage your accounts. Your statements that

LarryDuracell wrote: »

I'm trying to minimise the amount of time I spend online checking in on my bank accounts - I end up being a month delayed, discovering I've missed something...

and

LarryDuracell wrote: »

When I have not had the full sum in my current account, this causes a problem: the direct debit fails, the bank adds a credit event to my record.

rather implies that you are not managing your accounts particularly well. With just one current account and two credit cards I can't see the problem. That should be dead easy to keep tabs on. And take very little time at all.

If you read around this forum you'll find people with many more accounts than that managing perfectly well.

LarryDuracell

@Zanderman: I've limited my original post to a description of an improvement I'd like to see - which I believe would help me.

I've not gone into detail on why I think it would help me, or tried to explain to others why the circumstances of my life are such that I think it would - even if it wouldn't help others.

I'm not a regular user of this forum, but would conjecture that it will do its job well if it helps users answer the questions they are facing - and less so if it criticises them for facing those questions.