Brain teaser - Charges for being 1p overlimit?

[thegoodsamaritan]

Heres a (hypothetical) question for you to think about - I think some of you may be shocked!

 

I go into the bank and find I'm overlimit. The teller tells me a company tried to take a D/D last week for the sum of £1.99. However there was only £1.98 available in the account at the time. This left me a whole ONE PENCE SHORT!

(I have a standard "interest paying current account" I don't usually pay fees on & other than the attempted D/D there are no other transactions on my account this week)

 

My question to you is this-

In the WORST CASE SCENARIO how much will I have incurred in charges over the last week for being just ONE PENCE SHORT??

 

Answers on a postcard below please (i'll post the answer later once someone gets it right)

 

*******

Edit - Answer is £132.00 check further down for an explanation of this

[thegoodsamaritan]

Ok you can forget about interest i'm just talking about the charges.

No-one has guessed high enough yet btw!

[thegoodsamaritan]

£240's too high (theres no daily charge on the accounts by the way)

[thegoodsamaritan]

No ones quite got it yet...

Here's the answer and what would need to happen (remember this is the WORST case scenario!) :

 

Charge 1 - If the bank decides to bounce the DD (£38 unpaid item charge applied immediately)

Charge 2 - The account is now taken overlimit because of the above charge (£28 overlimit charge is accrued on system)

Charge 3 - Company will automatically represent the same DD a few days later and it will bounce yet again (another £38)

Charge 4 - If the customers statement just happens sent out during the time they are overlimit (further £28 overlimit charge is accrued on system for inclusion in next months statement)

 

£38 x 2 unpaid item fees + £28 x 2 overlimit fees = FOUR CHARGES TOTALLING £132 FOR BEING JUST 1 PENCE SHORT!!!

Obviously if you are living on a tight budget having £132 wiped off it will affect you in the coming weeks and you'll no doubt incur an awful lot more charges and interest as has already been pointed out by some people.

 

Please note this is a worst case scenario I don't want to scare anyone unnecessarily - If your account is generally run fairly well its doubtful the bank would bounce a payment like this in the first place (not sure exactly how the decision making process works though)

 

Hats off to jonni2bad who was just a fiver out with £127

[thegoodsamaritan]

I think everybody was on the right track.

 

Strangely, despite clocking up over £600 in RBS charges in the past 2-3 years, I have not once been charged the £28 overlimit fee. This is on a basic "Key" account with no overdraft facility where the charges have taken me overdrawn (i.e. balance below £0.00 )

Yes, there's no charge for this on a key account. It does not have any credit facilities (ie chequebook, debit card, overdraft). You'll be offered this account when you sign up if you don't score for a regular account (though we'd like you to have one of these as there's more sales points in it for us staff!)

[thegoodsamaritan]

There are no referal charges when the bank bounces DDs.

Referal charges are only applied when the bank decides to pay a DD when there is not enough money.

 

Unpaid Item Charge (£38) - when an item is BOUNCED due to not enough funds.

Referal Charge (£30) - when there are not enough funds to cover an item and the bank still PAYS IT for you regardless.

You can only have one or the other not both charges at once.

 

The decision seems to be made automatically and is based on your account conduct.

[thegoodsamaritan]

I assume your with Royal Bank of Scotland, Woolfie?

 

You're told about your referal charges on a seperate sheet at the back of your months statements but they won't be debited to your account until the sixth working day of the next month.

Have a check back through the statement where they tell you when they will be debiting your referal charge(s) and you'll see that you've had cheques, DDs or SOs paid when there is not enough cleared funds. (£30 for each time it happens up to a maximum charge of £90 per month)

 

I said you can't have both charges at once - what I meant was you can't receive both charges for the same item. You may be unlucky and have an unpaid item charge on the same day the previous months referal charge is taken from you.

 

A referal charge applied on the 10th April will relate to something that happened in February or March and will say "Referal Charge 15 Feb 2006 - 15 Mar 2006" (or whatever your statement date was)

 

I can see how it could be confusing as referal charges can come of anything up to almost 2 months after the original incident.

 

Hope this helps

[thegoodsamaritan]

£90 is the maximum monthly charge for referal charges (ie 3 or more PAID items that take you over your limit)

£28 is the maximum "maintenace charge" each month (if you are ever over your limit)

£38 unpaid charge per item that is unpaid so if you had 1000 items bounce in a month you'd be charged £38,000!

 

 

Bounced DD = Unpaid Item Charge of £38

DD Paid (ie not bounced) when there are not enough funds = Referal Charge of £30 per instance the bank has paid a DD when there are unclear funds up to a monthly maximum of £90

 

In the example I gave the item is not paid (ie bounced) so there is an unpaid item charge. Referal charges are only incurred when the bank pays the item (ie doesn't bounce it)

 

Yeah charges are deliberately confusing not all staff seem to understand them so i can see why customers struggle with them. This helps the bank as less people understand the charges so are less likely to challenge them successully in the traditional way.

 

By the way I've a whole thread about how the charges are worked out, its called "how we calculate charges" or something like that (you can find it in "a word from banks") have a look there if it helps.

[thegoodsamaritan]

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