Amex early direct debits

Marchitiello

i have an Amex card since 2002 and have always paid the minimum via DD and then topped up via bank transfer. In the last few years I have done the top up via Debit Card in the Amex App. By doing this the money do not live my Santander account actually for 2-3 days after the balance has been paid on the app and thus keeps earning some interest…

Marchitiello

Jami74 said:

My Tesco credit card is also taking direct debit about a week before payment due date.

Why does it matter? You've used their money and know you need to pay it back and they give you plenty of notice when they'll take the direct debit so not like it's a surprise. Is it a shady practice? I can't see how it discourages people from paying in full.

It matters for people that use Credit Card to maximise cash flow and earn interest on the money in their account. The DD being taken early (to me is actually a bit earlier then a week usually) affect the maximum of 56 days advertised as free interest, so it does matter but as stated in my other response, I have found a way to make it work.

[Deleted User]

Marchitiello said:

Jami74 said:

My Tesco credit card is also taking direct debit about a week before payment due date.

Why does it matter? You've used their money and know you need to pay it back and they give you plenty of notice when they'll take the direct debit so not like it's a surprise. Is it a shady practice? I can't see how it discourages people from paying in full.

It matters for people that use Credit Card to maximise cash flow and earn interest on the money in their account. The DD being taken early (to me is actually a bit earlier then a week usually) affect the maximum of 56 days advertised as free interest, so it does matter but as stated in my other response, I have found a way to make it work.

It is different from most credit card providers but is Amex's commercial decision to collect well in advance of the the due date. I personally pay by forward dated Faster Payment so It doesn't affect me. 

Mature-Student

Marchitiello said:

i have an Amex card since 2002 and have always paid the minimum via DD and then topped up via bank transfer. In the last few years I have done the top up via Debit Card in the Amex App. By doing this the money do not live my Santander account actually for 2-3 days after the balance has been paid on the app and thus keeps earning some interest…

Thanks for sharing your experience and how you get around this, albeit with some manual intervention. Much appreciated. 

Mature-Student

kaMelo said:

I tend to agree with both Alex and blue.peter. Yes, Amex takes the DD around a week to ten days prior to payment due by date, but that is not a "shady practice" in the slightest nor does it "discourage payment in full".  I've had an AmEx over ten years and this is something it's always done in that time. If you know it always does it and your always paying the whole balance off then, other than running your interest free period to the absolute maximum then what's the actual problem?  

"Shady practice" is advertising your product as offering 56 days interest free credit, when if you pay in full by direct debit you only get 45 days i.e. a shorter period by over 20%.

And 'it discourages payment in full' by taking the direct debit even earlier than if you want to pay the minimum or a fixed amount by dd. In effect you are being penalised with earlier repayment date and so a shorter interest free period for clearing your balance every month.

Those, and the fact that current banking practices now enable same day payments inter-bank/financial institution (Faster Payments) as standard, meaning Amex have no reason to continue to operate in this manner, other than a desire to improve their own finances at the expense of their customers. 

Either be clearer in advertising that the interest free period varies from 45 - 56 days depending on payment method. Or change their processes in line with the improved capabilities of Faster Payments & the dd system.

kaMelo

Mature-Student said:

kaMelo said:

I tend to agree with both Alex and blue.peter. Yes, Amex takes the DD around a week to ten days prior to payment due by date, but that is not a "shady practice" in the slightest nor does it "discourage payment in full".  I've had an AmEx over ten years and this is something it's always done in that time. If you know it always does it and your always paying the whole balance off then, other than running your interest free period to the absolute maximum then what's the actual problem?  

"Shady practice" is advertising your product as offering 56 days interest free credit, when if you pay in full by direct debit you only get 45 days i.e. a shorter period by over 20%.

And 'it discourages payment in full' by taking the direct debit even earlier than if you want to pay the minimum or a fixed amount by dd. In effect you are being penalised with earlier repayment date and so a shorter interest free period for clearing your balance every month.

Those, and the fact that current banking practices now enable same day payments inter-bank/financial institution (Faster Payments) as standard, meaning Amex have no reason to continue to operate in this manner, other than a desire to improve their own finances at the expense of their customers. 

Either be clearer in advertising that the interest free period varies from 45 - 56 days depending on payment method. Or change their processes in line with the improved capabilities of Faster Payments & the dd system.

AmEx can only draw a payment direct debit,  if you think differently please explain how AmEx can make use of Faster payments to take money? 
They are very clear in that they offer "up to 56 days interest free" 

I still don't understand what the problem is, in the wider context of picking your battles is this really a hill you want to die on?

blue.peter

Mature-Student said:

And 'it discourages payment in full' by taking the direct debit even earlier than if you want to pay the minimum or a fixed amount by dd. In effect you are being penalised with earlier repayment date and so a shorter interest free period for clearing your balance every month.

You want the convenience of paying in full by DD. That's fine, but sometimes convenience comes at a cost. In this case, the cost is that payment is collected a bit earlier than if you paid by a different method. You need to decide whether that cost is worth paying or not. If you decide not, you have alternative options available. You can:

1. pay the amount due by a different method; or
2. use a different credit card.

If you want to take your complaint further, that's your prerogative. But you should expect it to be thrown out. I really can't see FOS (if you go that far) taking it seriously.

You really are making a mountain out of a molehill.

By the way, you'd rarely get as much as 56 days credit anyway. Getting that much depends on (a) making your purchase at the beginning of your statement month; and (b) the relevant month having 31 days. If you buy your groceries (or whatever) close to the statement date, you'd only get a maximum of about 25 days interest-free credit. As @kaMelo has pointed out, it's never advertised as "56 days", but as "up to 56 days". 56 days is a maximum, not something that always applies. It's only 56 days in exceptional cases.

s_r

I do not pay my Amex by Direct Debit for this very reason (of payment being taken well in advance of the due date), but rather I just make the payment when I want through their app (or online) and it always shows in the account instantly. I suppose I am in the minority of never having set up direct debit for my credit card payments!

WillPS

s_r said:

I do not pay my Amex by Direct Debit for this very reason (of payment being taken well in advance of the due date), but rather I just make the payment when I want through their app (or online) and it always shows in the account instantly. I suppose I am in the minority of never having set up direct debit for my credit card payments!

I leave minimum payment DDs in place on all my credit cards just so that if I fall in to a coma or something obligations will still be met, but settle the balance manually each month for the same reason (that and it's an easy way to meet Halifax £5 rewards for spending £500 on a debit card).

Vortigern

Amex taking the DD earlier than necessary was a minor niggle, and like Marchitiello I pay the minimum by DD and the remainder of the full balance on the day before the due date. It's less of an issue now that savings interest rates are so low.

The DD satisfies a requirement of a currect account with rewards for DDs.

The remainder of balance payment usually meets the requirement for £500 DC spend on Halifax.