How charges are worked out when u go overdrawn

[thegoodsamaritan]

I've tried to keep this as simple as possible (not an easy task!) hope it helps people understand how the system works. Here's what happens when an item (direct debit / standing order / cheque) is due off your account that will take you over your overdraft limit on RBS current accounts (other banks processes will be similar i'd imagine):

 

 

If an item is taking you over your agreed limit that day then YOU NEED TO CHECK with us if its being paid or not, otherwise you have no way of knowing which option will apply. There is a system in place whereby RBS will assess your account and decide whether or not to pay the direct debit / standing order / cheque:

 

 

Option 1. RBS will pay your item (shows on our system as "autopay")

This will obviously put you over your agreed overdraft limit, and result in what is called a “paid referal fee” of £30 that will be applied on the 6th working day of the next month (NB RBS will only charge you a maximum of 3 of these particular type of fees per month)

You will also be informed on your next statement of a £28 charge for “unauthorised borrowing – maintenance charge” and the date it will be debited to your account (about 2 weeks after you receive your next statement). Careful though - you are charged this £28 for every seperate monthly statement you show as being overdrawn so could be unlucky and would be charged twice if your being overdrawn ran over into your next statement to be sent out.

Essentially you'll be charged twice regardless – once (£30) for us paying an item when there are not enough funds and secondly (£28) for now being over your limit in the current statement period

 

Option 2. RBS will bounce (return) your item (shows on our system as "unpaid")

Although the item will still show on your statement if you look at it that day when you check the next day it will have disappeared (ie not been paid!) and been replaced with a standard £38 “unpaid item charge”.

(NB There is no limit here so if you were unlucky enough to have 1,000 items bounce on one day you would be hit with £38,000 of unpaid item charges!)

If the item is a cheque or Direct Debit normally it will be represented for payment a few days later and will probably bounce again if there are not yet clear funds in the account, resulting in yet another £38 charge for each unpaid item!

Also if this £38 charge(s) takes you over your agreed borrowing limit remember you will be charged the standard £28 maintenance fee as well for every statement period this covers.

 

 

If you can pay money in before 3.30pm (end of the banking day) then we can make sure the item is paid. (You need to tell us at the time that the money is to cover a DD / SO / cheque so we can go in and change the status of the item from "unpaid" or "autopay" to "paid") This will pay the item and in most cases eliminate any charges. (I believe that HBOS is stricter than us and require that customers have available funds to cover items in the account by 23:59:59 the day before or you will be charged and the item could bounce.)

 

 

Hope this is useful! Bear in mind the above illustration is just how RBS work it - other banks will probably be slightly different

Any questions just ask!

[monkey_uk]

Great stuff, thanks a lot!

[Neo]

TheGoodSamaritan,

 

Thanks for that - I always wondered how it worked.

 

One question, do you think it;s wrong?

[horace4831]

Thanks for your insights into the procedures!

 

Now for the $64,000,000 question----------

 

Would you please be prepared to say what

is involved in the so-called "manual intervention"

involved in dealing with Unpaid Items,etc?

 

And maybe your opinions of how well the charges

made to the Account involved relate to any extra

work created as aresult?

 

It is something most users of this site would really

LOVE TO KNOW!

[oriental]

I bank with Natwest, which i now believe is part of the RBS Group? I have been into my branch a few times to contest an item/charge in question and have been repeatedly told that i needed to have the funds available the PREVIOUS day, in order to cover payments due out the following day. I've tried to pay money into my account same day but still get charged regardless.

 

Sorry thegoodsamaritan, but i beg to differ.

[Bookworm]

Oriental, you need to read the post more carefully. Thegoodsamaritan is saying precisely that, that the money has to be in the day before or you'll get charged.

 

Edited: My mistake, I'm the one who misread. I've obviously been so well trained by NWB that if I read "funds" and "3.30", I AUTOMATICALLY read "the day before". Pavlov, eat your heart ourt.

[thegoodsamaritan]

I'm only talking about RBS branches. Although RBS owns NAT West they are run as a completely seperate company so have different processes (soz don't know what NAT West's processes are).

 

Lets be clear on this: Royal Bank of Scotland Branches you can pay money in to cover direct debits and standing orders before 3.30pm as long as you tell the teller that this is what the money is for you will avoid charges and the items will be paid. From the sounds of it this is not possible with NAT West.

 

In response to an earlier post I do think the charges are extortionate but feel there needs to be some sort of balance and responsabilty - If we all went overdrawn all the time with no consequences then the economy would go t*ts up and that would ultimately backfire on everyone. Perhaps the simplest solution would be no money in the account = do not let the customer withdraw for anything and do no charge them for this (though there are problems that would need looked at such as how do we treat cheques, debtor interest etc)

If the banks don't make their money this way I think they'll just respond by charging us a small amount for each service we use (ie cashlines, processing cheques & payins) Charging for atm withdrawals is already common in a lot of countries worldwide.

 

As for manual intervention in charges I don't know the ins and outs of how it works I'm afraid - we don't decide this in branch. Common sense would obviously dicate that it does not cost the bank £38 to return a direct debit. All I can say is that some items are marked as auto-pay on system - this would therefore imply to me that its automatic.

 

Thanks for all your words of support btw

[Arwen]

Years ago -and I mean 1999, I worked for Lloyds TSB (well TSB then). They got a print out of people that were overdrawn/over their OD limit and had supervisors who made manual decisions on whether to pay the charge. The general point was that they would pay the item if the funds were in before 11am-12 noon. The sheets if I remember correctly were in account no order, so if you had opened your account recently, your account no was further down the number scale and you had more time (this would also depend on how many DD's were referred also).

 

We had people asking then how our charges were worked out-and we didnt have a blimming clue......... . The first point of contact (at the Customer Service Desk) could only refund one charge-at that time £25. I got pulled up for being £3 OD as a bank employee.

 

The Bank treated me like poo-which is why I left, and your letters? If they didnt fancy dealing with them-they were filed, under B for Bin.This may explain why some of your letters asking for refunds have gone astray........

[Rooster-UK]

Apparently Barclays works as follows....... Out before in.

 

For example If you go into your branch to pay a bill, and to deposit the cash to cover it, then the bill will only be paid if you already have sufficient funds in your account to cover it !

 

Debits are applied to your account before credits.

[Andy999]

Apparently Barclays works as follows....... Out before in.

 

For example If you go into your branch to pay a bill, and to deposit the cash to cover it, then the bill will only be paid if you already have sufficient funds in your account to cover it !

 

Debits are applied to your account before credits.

 

Kind of. Debits that come out of your account overnight (cheques, Standing orders and Direct Debits) are applied after credits that go in overnight (salary payments etc). Therefore the amount credited will not be taken into consideration when deciding whether to pay a direct debit etc. There should be funds in the account at the close of business on the previous day to cover any payments and avoid charges.

 

I worked for Barclays until last year, but doubt these things have changed since then.

 

If you have Direct Debits, Cheques or Standing Orders due out of your account, you should have sufficient funds available to pay them in the account by the close of business on the previous working day. Note that, at many branches, credits made during the last hour or half hour of business are not processed until the following working day. There should be a notice giving the counter cut off times displayed in each branch. Barclays will pay against uncleared cheques, up to £1000 per customer, provided the account is not marked as high risk.

 

At the start of each day, a list of all items due to go out of accounts with insufficuent funds is generated. Some of these items will be paid anyway (if it's a small amount or if you have run a good account with the bank). You'll be charged a Paid Referral for going overdrawn by more than £5, which was £25 when I worked there but I think is now £30. These are calculated on the balance at the close of business each day - so if a Direct Debit goes out overnight and makes your account overdrawn, you can pay in cash that day to cover it and avoid a charge.

 

If your balance goes overdrawn by a further pound on a subsiquent day, you will be charged another fee. You will be charged a maximum of one fee per day and three fees per month (where month means your statment period, not calander month). I believe that your first paid referral fee each year is now automatically refunded a few days later. That was introduced just before I left, but may have changed now.

 

If an item is unpaid (bounced), you will be charged an unpaid item fee, which is now £35. You will only be charged one of these per day (even if 10 items bounce), but there is no limit on how many per month you will be charged. If you pay in cash that day, it is technically possible for a member of staff to change a direct debit or standing order to be paid, although in the case of direct debits most staff don't know how to do this. Cheque status cannot be changed unless the bank has made an error, and it's early in the day.

 

There's also a "Chaque Guarantee mis-use fee". I don't know how much this is, and only ever saw one customer being charged them. These apply when a cheque is paid which would have bounced had it not been guaranteed. I'm unsure of the rules surrounding these fees as they were very rare.

 

All the above charges are applied on the day the "service" was provided.

 

The same also applies to Student accounts, but the fees are lower.

 

Premier Banking and Business Banking have their own rules, so I can't comment on charges on these kinds of accounts.

 

Sorry for the length of this message...hope it's clear though.

[blinkyblinkyblonk]

Rooster i got told that the debits go out first and then the credits go in,

 

thats been my problem with halifax, ive had the credits in there but they paid the cheques first,

[MARTIN3030]

Thanks for your insights into the procedures!

 

Now for the $64,000,000 question----------

 

Would you please be prepared to say what

is involved in the so-called "manual intervention"

involved in dealing with Unpaid Items,etc?

 

And maybe your opinions of how well the charges

made to the Account involved relate to any extra

work created as aresult?

 

It is something most users of this site would really

LOVE TO KNOW!

 

 

 

I think this is actually a 64,000,000,000,000, dollar question.

 

Which as you know (according to Barclays) the banks say have no obligation to reveal under DPA rules.

 

Presumably the staff dont get told either I think only the ones at top admin would know the answer to this one !!!

 

[telewest]

Double Post removed

[telewest]

edited

[Guest NATTIE]

NW is £50

[telewest]

edited

[Guest NATTIE]

i think we are getting off thread but another RBS bod stated a process that was identical to NW so i was suprised how wrong that was. And out telephony units used to offer compensation like it was confetti. Come into the branch and it was sorry and we'll sort it out ring up and it was sorry have £20.

[telewest]

i think

 

Glad to hear it

[Mistermind]

NatWest IT merged with RBS on 5th October 2002. All 14 million NW accounts were uploaded onto RBS IT system to join the 4 million RBS accounts. Thereafter all NW accounts were handled overnight by the same IBM mainframe software as RBS, although the processing was kept separate for the 2 banks, with minor exceptions such as interest application date retained for NW.

 

Possibly a few small NW frontend systems were retained in NW branches which have no counterpart in RBS. Those who worked in NW IT knew about the notorious tricks. Wherever it suited the bank they rounded interest UP to the nearest penny. Whenever it did not suit they truncated interest DOWNWARDS to the nearest penny.

[Guest NATTIE]

Mate part of NW systems is still within the RBS IT in the branches today, called the NatWest Archive

[telewest]

And HOIS (Head OFfice Information System) I used to sit in a Natwest branch and check my RBS account regularly.

 

Wherever it suited the bank they rounded interest UP to the nearest penny. Whenever it did not suit they truncated interest DOWNWARDS to the nearest penny.

 

When NW was successfully integrated into the RBS systems all RBS staff (and NW staff that worked specifically on the integration) got 5% of their salary as a bonus - which was a bonus !

[Guest NATTIE]

Yes I did it was great!!! All staff got it, well all NW did

[Desideratist]

(I believe that HBOS is stricter than us and require that customers have available funds to cover items in the account by 23:59:59 the day before or you will be charged and the item could bounce.)

 

Yeah I had this - worked out over the weekend that I would go overdrawn on Monday so the boyfriend put money directly into my account by Internet banking before work so that it would clear immediately. So it did, according to my bank statement.

 

Still the 39 pound bounce charge though. When I rang them to point this out, that according to my statement I had always had the money for the thing that went out on Monday, they told me that the money going out clears before the money going in (thereby earning a bit more for them, presumably) and so for a gnats whisker of time I was overdrawn by about ten pounds. So they charged me. Even though according to the statement the money had gone in in time.

 

Desi

[david.m]

any A&L phone banking workers here or know their workings?.

 

regarding the labour forced state benefits being payed into english branches.

 

as i understand it scotland has laws stopping the bank making any charges against any state benefits, however for england there does not currently exist such law.

 

however there was some form of cosy chat or some such were the same rights were included in the banking code, is that right?, and if so can A&L just take this protected by law (until it hits the bank account that is) basic existing allowance in charges and is there a way they can be held accountable as an exeption to the usual rule, other than the usual options that i will need to use once i can work out some health problems.

 

in my case, i opened an A&L phone banking account for child benefits and thats all thats ever been payed in there other than a one off £20 cash payment, that account had (was canceled by me) one monthly direct debit to NTL:tw for broadband since nov last year until 2 months ago, nothing else so its clear its for state benefits, and pulling out the odd £20 when well within credit.

 

NTL asked for their DD 1 day early and put my account over by 57P (even though they didnt pay it), then the charges hit, a second request got refused as the charge had been taken by A&L, and these being more than the CB going in, they keep taking and adding on as it will never be cleared.

 

this week i managed to pull £20 out, but theres going to be another 2 £25 charges in 6 or 7 days time, thats the basic info.

 

i know i can do the give me my sons state benefit back, then the LBA and finally the 10 mile trip to the CCourt to get help wording and filling in the N1, but i would really like for some banking people to comment on the banking code or other insider thoughts about a clear cut state benefit account in england today.

[Andy999]

You're entitled to be able to withdraw your benefits - but you need to tell the bank you need to do this. I don't specifically know about A&L but there is more than likely a certain department you need to speak to in order to authorise this. The Phone Banking staff probably won't know much - ask if they have a debt management department you can speak to.

 

Alternatively, divert your benefits into another account, set up no DDs on the new account and ensure you don't ever get into a situation where charges can occur. If you are planning on claiming back the charges from A&L, these should clear the overdrawn balance on that account.