Who gets NS&I interest during 3 day BACS transfer out of NS&I? 30 November 2022 at 12:39PM in Savings & investments 28 replies 2.2K views

Economme

I'm curious

NS&I large payment transfer out was requested online on the 27th, BACS payment left my NS&I account on the 28th, and was credited at the receiving bank on the 30th.

Who gets the interest on the missing days?

eskbanker

What makes you think that money in transit earns interest?

Flugelhorn

the money isn't "anywhere" to earn interest

km1500

Well it is "somewhere", but not in an interest-bearing place.

Now if the OP had asked 'who gets the financial benefit' then that would be different.

Swipe

Depending on how large the sum, it might have been better to do it in £50K chunks for next working day arrival.

Mutton_Geoff

How large an amount? Even on £100k, you've only "lost" £10 (£5 a day).

Try Premium Bonds, you get burned on the way in and again on the way out!

Swipe

Mutton_Geoff said:

How large an amount? Even on £100k, you've only "lost" £10 (£5 a day).

Try Premium Bonds, you get burned on the way in and again on the way out!

Not if you cash them to a direct saver and then withdraw them for arrival next working day

Economme

Thanks all - your answers (/interest) brought a smile to my day.


'financial benefit' would have been a better term,

and the opening post was not asking really for my one transaction, but for the aggregate of many NS&I customers who transfer their own money out of NS&I,
and also out of curiosity for the Gus Gorman/Superman III, top/salami slicing, coin clipping implications that those missing days could represent, in this modern age of instantaneous transactions and ethical banking.


(and please don't mention non-transferable road tax)

km1500

I believe the BACS system is used by organisations that want to do a large number of payments each day - it probably would be impractical to do that number of faster payments each day.

So during the day, as people request withdrawal of their money or whatever, the organisation (eg NS&I) build a file of 'transfers' which obviously gets larger and larger as the day progresses. They then submit this file to their bank before the BACS cut off date.

So:

Day 1 - NS&I have the financial benefit as they haven't done anything other than build and submit a file to process.

Day 2 - NS&I's bank get to work processing the file, debiting NS&I's account and sending the money to the banks of their customers. So day 2, the customer's banks have the financial benefit.

Day 3 - the money is finally moved to the customer's account.

isasmurf

km1500 said:

I believe the BACS system is used by organisations that want to do a large number of payments each day - it probably would be impractical to do that number of faster payments each day.

So during the day, as people request withdrawal of their money or whatever, the organisation (eg NS&I) build a file of 'transfers' which obviously gets larger and larger as the day progresses. They then submit this file to their bank before the BACS cut off date.

So:

Day 1 - NS&I have the financial benefit as they haven't done anything other than build and submit a file to process.

Day 2 - NS&I's bank get to work processing the file, debiting NS&I's account and sending the money to the banks of their customers. So day 2, the customer's banks have the financial benefit.

Day 3 - the money is finally moved to the customer's account.

A slight correction to that. The money doesn't actually leave NS&I until it is credited to the receiving account on day 3.

Day 1 (Input Day) 

File submitted to BACS of all payments out.

Day 2 (Processing day) 

BACS separates file to individual banks, combining with payments from other places and delivers file to the receiving bank which then processes it. It finds a payment for the customer and sets it as a pending credit to the customer's account. Money is still with NS&I. 

Day 3 (Entry day) 

Payments are simultaneously credited to the customer's account and debited from NS&I account. 

masonic

With overnight SONIA rates up near 3%, NS&I probably is able to make some money from the balance of their holding account, although only for 2 days, probably a little under £2/£10,000. More if spanning a weekend.

I don't think there would be any practical reason why NS&I could not use Faster Payments for these transactions, so their continued use of BACS will be driven by inertia. Then again, their revamping of their logon process has left a lot to be desired, so perhaps some things are best left alone.