Direct debits and standing orders going out the same day salary is paid in? Charged overdraft fees?

SouthLondonUser

If I have my salary paid into my bank account via BACS, can I have standing orders and direct debits going out of the same account on the same day?

Or is it best to ensure payments go out at least 1 day later?

Basically the question is twofold:

1) Can I be in a situation where, say, the payments go out at 8.00am, the salary gets paid in at 10am, so the payments would fail if I don't have enough money before the salary gets paid? or does this depend from bank to bank

2) If instead I have an overdraft agreed, would I be charged for the overdraft? Do banks charge for an overdraft which gets repaid on the same day? Or is it one of those how-long-is-a-piece-of-string questions, before each bank can have wildly different terms?

Thank you!

TadleyBaggie

You should only get overdraft charges if at the close of business your balance is below zero. I've had several occurrences where during the day by balance has been below zero but due to deposits above zero later and never been charged (this is with Nationwide).

Rob5342

It probably depends on the bank. With a modern bank like Monzo it's easy as the app says inbound payments happen at 1:00 and direct debits happen at 3:00. Older banks are a bit behind the times so I'd allow a day in between just in case.

MikeJXE

Not a very smart idea any of it, it's like driving on the edge of a cliff. When there is a bank holiday payments can go in/out before/after. A better idea would be to always be in credit by having your salary in a few days before your standing orders and direct debits are due to go out. It's only a case of depriving yourself of spending on something you can't afford anyway. 

SouthLondonUser

@mikejxe, if the day in question is a bank holiday:

* my salary will be paid on the previous business day; it's always been like this in every job I have had but I cannot be sure that every single employer does the same

* Monzo and Starling will send out standing orders on any day, even if it's a bank holiday. Dinosaur banks will wait for the following business day, but, either way, money comes in before it goes out, so that's not an issue

PS I do agree with you that it's best to leave yourself some buffer. I asked because I wanted to understand how this works, and because I have a credit card that doesn't let me change the day the direct debit gets paid. It's Pulse, which replaced the Amazon NewDay card. One more reason why I might cancel it altogether.

grumbler

SouthLondonUser said:

If I have my salary paid into my bank account via BACS, can I have standing orders and direct debits going out of the same account on the same day?

Or is it best to ensure payments go out at least 1 day later?

The latter. It's not just about overdraft fees. A DD can be rejected by the bank if the balance is insufficient. Usually there is a second attempt PM, but if the balance is still insufficient, then that's it.

Rob5342

I always try and get my direct debits and standing orders set up for the 1st of the month. That gives a bit of leeway especially I I change jobs to somewhere that pays on a different date.

DullGreyGuy

I've always thought it prudent to have the DDs set up to go out after payday just in case something goes wrong. 

Most banks, even old fashioned ones, allow you to bring the balance back into positive before close of play before fees are charged. If you look at bank statements most dont order transactions by time but by direction and so even if you pay comes in before the DDs go out on the statement it may be reversed and show negative balances because they list all withdrawls before inbound payments. 

The bigger risk is therefore DDs bouncing rather than over overdraft fees... the company you are paying may charge fees if DDs bounce.

Alex9384

DullGreyGuy said:

I've always thought it prudent to have the DDs set up to go out after payday just in case something goes wrong. 

Not everyone can do that though. I get paid every 4 weeks on Friday, so the date of my payday is different each month.

kaMelo

Slightly off topic but the best advice I received was to stop living payday to payday and get ahead of the game. Set up monthly DD's to be paid before you get paid. It might take a while to get there but when you do you've always got a months salary as a cushion.

penners324

I have salary in on last day of the month (my company pay by faster payment, so it's always last day of the month). All DDs go out on the 1st.