Why Don't People Use Direct Debit??

Cazza

Milarky wrote: »

Doesn't stop you from having the minimum payment set up by direct debit on one of these accounts though, does it?

True, but a bit pointless when you clear the balance in full each month!

Tribulation

One of the biggest reasons people hate DD'd is because they have been screwed by companies in the past.

Classic example that I've seen numerous times is Virgin media taking out 2 payments instead of one, or the customer signing up for £50 per month package and them screwing up and taking £75.

The customer complains to Virgin, gets confronted by a script reading CS rep, and is simply told the money will be credited to their account the following month.

Some of these customers strictly budget for what they can afford, and have enough money in their banks to cover the DD's plus say an extra £20.

Virgin then takes £50 more than expected, the following day a DD to another company is refused due to insufficient funds, then charges are added on both by the bank, and the company who's payment was refused, this then leads to a knock on effect and the customer looses all faith in the DD system.

I'm using Virgin because I help mod a cablehell site and this sort of thing has happened quite often.

The DD guarantee seems to be almost useless in such cases, Virgin requested an amount, the bank paid it, the customer has no written conformation of the amount Virgin will take out as they don't supply it. If the customer does get the bank to refund the money, it takes a while, plus they will not get the late charges back incurred by other companies whose DD's were not paid due to the knock on effect.


I myself last month had BT take out £32 by DD even though I had been paying £22 by DD for the past year and my last statement said that my current payment is fine. They stressed that if they needed to alter it I would be contacted. I wasn't. I had the money in there to cover it though.

When I wrote to BT to complain, and politely pointed out that they were supposed to inform me if they increased my DD, and requesting that they make sure they stick to their terms and conditions in future, and quoted that their own site says the following as part of the Direct debit Guarantee

If there are any changes to the amount, date, frequency of your Direct Debit, BT will notify you in advance of your account being debited. This will be 10 working days or as otherwise agreed.

Here is a cut and paste of their response, no editing or corrections at all except for removing my personal details.

Dear Mr x,

Good Morning.

Thank you for your e-mail dated 1/4/08 regarding your bills and payment through direct debit.

On the receipt of your above mentioned query, I have checked your account details as per the request you have mentioned in your mail that why there is an extra charge for this month.

I would like to inform you that your BT account is setup on the monthly payment plan for your convenience that every month it there would be a debit of £32 whether your account or your bill is on the higher side. For eg: Your February bill was of £102.89 but still we have debited £32 and it keep fluctate according to amount of the bill and it is done automatically by the system.

We always make sure that the customer should get the benefit and convenience on the monthly payment plan.

If I can be of any more help, assuming I have already been of some, please do not hesitate to contact me.

If you want to tell us you have paid your bill, there is an easy and convenient way of doing this on our website. Please visit www.bt.com/billpaid and follow the on screen prompts.

Thank you for contacting BT, we value your time and money.

Yours sincerely,

Gupreet Kohli
eContact Customer Service

That is why a lot of people hate DD's. Had it been a few years ago when I was financially struggling, it could have caused no end of problems.

exel1966

NickX wrote: »

The consequences of a bounced Direct Debit are worse than a late payment.
quote]

I would say that preserving a good credit record with on-time payments would have far greater importance than the odd bounced DD.
The bounced DD may 'cost' in the wallet short-term, but it won't screw you for six years !

Each to their own !

NickX

exel1966 wrote: »

I would say that preserving a good credit record with on-time payments would have far greater importance than the odd bounced DD.
The bounced DD may 'cost' in the wallet short-term, but it won't screw you for six years !

The odd late Credit Card payment certainly does not "screw you for six years".

In fact the occasional late payment has very little impact on your credit report. I would even go as far to say that it may even be looked upon favourably with Credit Card companies because it means you are a little too "laid back" in making your payments and will make them money with the occasional late payment fee.

What affects yout credit rating is continual late payments or defaults which give the impression that you struggle to repay your debts.

The charges associated with bounced DD can quickly escalate and the Credit Card company will slap on the late payment fee anyway, so I cannot understand your argument here.

exel1966

Not an argument, but a point of view ! Yes, the odd one will have a negliable impact, regular late payments however will have a very detremental effect.

To say late payments are 'looked upon favourably' is a rather crass statement. It may well make money for the organisation you're late with, but will certainley not be looked upon favourably by others.

As many people on thie site have found, a good credit history is priceless !

NickX

exel1966 wrote: »

Not an argument, but a point of view ! Yes, the odd one will have a negliable impact, regular late payments however will have a very detremental effect.

To say late payments are 'looked upon favourably' is a rather crass statement. It may well make money for the organisation you're late with, but will certainley not be looked upon favourably by others.

As many people on thie site have found, a good credit history is priceless !

OK my point on late payments being "looked upon favourably" is somewhat cynical, but more and more we are seeing credit card companies selecting customers whom they think will be profitable. This means not the customers who pay in full and on time, and not the customers who will default and fail to repay the debts - more somewhere in between, and the occasional late payment people will fall into the "in between" group. For evidence just consider the 161,000 customers who were ditched by Egg quite recently.

I don't understand your "point of view" about occasional bounced Direct Debits being less important than occasional late payments because I would think the bounced Direct Debit would incur the late payment anyway.

Walisana

Has anyone ever considered how much money the Direct Debit company makes from us by taking DDs early?

My next DD is due on Sunday's date therefore I would expect DD to take a payment either on the Friday or on the Monday. This time they've taken it on the Thursday ensuring that they have the benefit of my hard earned cash for a full 24 hours early.

We complain about the banks taking their time to move cash from one account to another and making a bundle in the process, but how much is this company making in addition to the banks.

Considering the size of people's DD payments these days I should think that the Direct Debit company must make multi-millions, by token theft, by taking payments even further away from the due date.

What can we do to fight back?

YorkshireBoy

Walisana wrote: »

What can we do to fight back?

Do you need to "fight back"?

After all, if it's a credit card DD, then YOU have had THEIR money for up to 56 days.

If it's a utility bill, then you've already 'consumed' the product for 30/90 days before having to pay for it.

And if it's a mortgage payment, then you're in pocket because you'll be charged less interest on your outstanding balance.

Seaxwyn

I don't have DDs set up for my credit cards as my OH and I have 3 different current accounts between us and it suits us to pay the cards out of different accounts different months. Also, I like to vary the amount I am paying on my 'no 1' credit card - some months can only afford the minimum, other times more. So I don't see any advantage in having a DD. And in (I'm guessing) 15 years of having credit cards, I have never ever made a payment late.

Guapa1

I've got a standing order set up and it goes out when I want it to. I've never really thought about DD. Since moving into my new place though I set up DD for council tax, gas etc, but my credit card and loan is still paid by standing order