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Brain teaser - Charges for being 1p overlimit?


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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

(Yes I work for a bank but am here to help! Please be nice to me! :))

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I have been charged £30 for a failed £40 direct debit from my current account to my savings account (held within the same bank and branch) because I was about 86p short!

 

Now claiming it back of course!

I only mouth my opinion, please look elsewhere for sensible advice! :)

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I don't bank with RBoS, but if this was A&L, it'd be an immediate £34 charge to return the £1.99 d/d for being 1p short. That'd put you £32.02 o/d - if you left that for a whole week, then you'd get another £50 of charges for having an "unauthorised overdraft".

 

Total of £84 (of course, there'd be "unauthorised overdraft interest" to add on too....) assuming that the "unauthorised overdraft" period was within one statement month - if it spilled over to the next statement month by a week, there'd be another £50 of charges....

 

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Okay, I reckon they would let it through, so £30 for that £28 unauthorised od plus stupid amount of interest, so around £60?

 

Of course if they were feeling evil that day they would have bounced it and charged you £39 and £28 unauthorised od so then it would be around £70.

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Very similar thing has actually happened to me, but with the Clydesdale.

 

I'll have a stab at...

 

£38 for returning the Direct Debit

£28 for THAT £38 putting you into an Unauthorised Overdraft

£28 for BEING Overdrawn during that calender month (disguised as an 'Account Maintenance Charge'

 

Grand total of:

 

£94.00 for being 0.01p short in your account.?

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I don't know the charges, but if we go by £30 a pop for simplicity, let's see:

 

£30 for bouncing the d/d, £30 for unauthorised monthly o/d, since it was last week, you would then incur a 2nd month of unauthorised monthly o/d.

Then as it was bounced, the company will have presented it a 2nd time, bounced again, another £30.

 

Getting close? Oh, and the presenting company may well charge you for their admin costs too!

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Hhhmmmm...

 

I will try -

£39 for failed DD

£30 exceeding overdraft fee

£28 for writing to you, to tell you that you have just been mugged

£30 account 'maintenance' fee

 

Total £127

 

Of course, if that goes to month two, then add another £60 = £187

 

???????

..

.

 

Opinions given herein are made informally by myself as a lay-person in good faith based on personal experience. For legal advice, you must always consult a registered and insured lawyer.

 

 

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...not to mention the fact that if your bank like mine debits the unpaid DD fees within 7 days, there is then the possibility now of insufficient funds to cover this week's DDs, leading to more charges and more unauthorised O/D fees at the end of the month...

 

If you invented a business that was able to earn this much money each week from each customer, you'd earn some kind of award wouldn't you, not to mention that fantastic cruise you'd be able to afford 10 times a year...

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Hi

I get charged £28 for being overdrawn and £30 in referral fees, subject to the having paid it, but if it were near the 1st of the month then then 1st £28 might take you over again, so then another 28 next month or the referral charge might take you over.

so maybe £58

or £86

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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

(Yes I work for a bank but am here to help! Please be nice to me! :))

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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 )

I only mouth my opinion, please look elsewhere for sensible advice! :)

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....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)

Not anymore - why? Coz it's all automated!

 

In the old days when there were friendly bank managers and common sense prevailed, these DDs would have been paid an no charges would have been applied.

 

The banks have created a whole bunch of 'bad debtors'

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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!)

  • Confused 1

(Yes I work for a bank but am here to help! Please be nice to me! :))

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What about the referral charge and interest? Would this not take the amount even higher?

 

Woolfie

Advice & opinions given by Woolfie are my own, and are not endorsed by Consumer Action Group or Bank Action Group, and are offered informally, without prejudice & without liability. Your decisions and actions are your own, and should you be in any doubt, you are advised to seek the opinion of a qualified professional.

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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.

(Yes I work for a bank but am here to help! Please be nice to me! :))

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I could send you statements that would appear to disagree with what your saying there!! I have a lot of unpaid items and referral charges at the end of each month!!

 

 

Woolfie

Advice & opinions given by Woolfie are my own, and are not endorsed by Consumer Action Group or Bank Action Group, and are offered informally, without prejudice & without liability. Your decisions and actions are your own, and should you be in any doubt, you are advised to seek the opinion of a qualified professional.

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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

(Yes I work for a bank but am here to help! Please be nice to me! :))

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Yup i am with RBOS. Just out of interest when you say a max of £90 per month is that for referral charges?

 

Oh and with regards to the initial question I understand what you mean but would you not get a referral charge for your hypothetical situation? If that was the only time that month you had gone over would that not be another £30 onto the total charges?

 

cheers

 

Woolfie

Advice & opinions given by Woolfie are my own, and are not endorsed by Consumer Action Group or Bank Action Group, and are offered informally, without prejudice & without liability. Your decisions and actions are your own, and should you be in any doubt, you are advised to seek the opinion of a qualified professional.

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