Where does the money go?

wbh1138

Can anyone answer this question for me please?

When I make an online payment to my credit card it can take 3 days fr the payment to be recorded but the money comes out of my current account straight away.

So where is it for those few days and is this legal?

Cheers

Stephen_Leak

It goes into what is called the "clearing system". Behind the facade of internet banking and the use of computers, the basic system for transferring funds would still be recognisableto a 17th century banker in a coffee house.

Same day transfers should have been introduced last November but this was postponed to this May.

geordie_joe

wbh1138 wrote: »

Can anyone answer this question for me please?

When I make an online payment to my credit card it can take 3 days fr the payment to be recorded but the money comes out of my current account straight away.

So where is it for those few days and is this legal?

Cheers

I tried to find out this once too.

I used to transfer money from bank A to bank B which was my savings account. It used to take 5 working days to get from A to B.

When I asked bank A why it took so long they said "We sent it to bank B immediately but bank B keeps it a few days so they get the interest"

When I asked the same question of bank B they said "We put it in your account immediately we receive it, bank A puts it into another account for a few days before sending it so they can get the interest from it."

Take your pick, one or the other is hanging onto it so they can gain interest from it. Not much for a single transactions, but they do it for every transaction.

My HSBC branch takes five days to cash an HSBC check even when both accounts are with the same branch.

moonrakerz

Who do you think gets the interest on all this money for the three days ?

Clue: Not you !

dunstonh

It goes from branch to their clearing house, then to bank of england then to clearing house of receiving bank and then to branch.

Until the revised cycle comes in during May this year a lot of the backend is still done manually or using very obsolete systems. However, most of the banks would have updated this and are handicapping their systems currently to comply with current rules and are waiting for the slow banks to get their systems right.

There are winners and losers in the clearing cycle. Those paying in cheques can often end up getting interest on uncleared funds from day 1 or even double interest when paying a cheque on their current account into their savings account.

The revised system will be a lot better though until the computers stop working.