Direct Debits Coming Out Early (UK)

[kolax]

What is with some Direct Debits coming out my account a 2-5 days early? Today, I just went overdrawn, because a direct debit came out - which was my Orange bill. Orange said they will direct debit my account "on or after 23rd of May". Well, I awoke this morning to find I had been overdrawn because a direct debit came out on the 21st of May instead of the 23rd of May.

What is puzzling me is that on my online bank statement, it shows up as the "23rd May - £xx.xx", even though the freaking money came out my account on the 21st May taking me overdrawn.

What is going on? Is this normal? Why is a direct debit coming out early? The fact that it says 23rd of May on my online bank statement makes me think it is my bank that accepted it early, rather than Orange sending the request 2 days early.

I've noticed direct debits occur 5 days early too - the bloody Royal Wedding really screwed me over, since the Friday was an official holiday and the Monday was a bank holiday, even though my direct debit was meant to come out on the Tuesday, it came out the Thursday before! What the hell..?!

Can someone explain all this and why it is normal? I don't understand why bank holidays affect digital transactions, unless they give their freaking computers the day off.

 

[iJohnHenry]

Playing with the "float" has become a World-wide pass-time, with banking institutions.

There is big money in the withdrawal/deposit timing of financial transactions.

And, as usual, the consumer loses.

 

[CalBoy]

Why not pay your utilities via credit card?

The only ones that I can't pay using a credit card are electric and water. Otherwise everything else (including ATT) gets put on a card that gives me fewer things to watch with my checking account.

 

[neiltc13]

Why not pay your utilities via credit card?

The only ones that I can't pay using a credit card are electric and water. Otherwise everything else (including ATT) gets put on a card that gives me fewer things to watch with my checking account.

The Direct Debit guarantee offers the following benefits over paying via credit or debit card:

if there is a change in the amount to be paid or the payment date, the person receiving the payment (the originator) must notify the customer in advance.

if the originator or the bank/building society makes an error, the customer is guaranteed a full and immediate refund of the amount paid.

customers can cancel a direct debit at any time by writing to their bank or building society.

 

[kolax]

Why not pay your utilities via credit card?

The only ones that I can't pay using a credit card are electric and water. Otherwise everything else (including ATT) gets put on a card that gives me fewer things to watch with my checking account.

Even if I had a credit card, I'd assume it would work the same way (i.e. a direct debit)?

I have no problem with direct debits - they are actually quite favourable to the consumer, as long as they come out on the date they say they will, not 5 days early on occasion!

 

[CalBoy]

The Direct Debit guarantee offers the following benefits over paying via credit or debit card:

Credit cards already offer most of those protections, at least substantially so.

Plus credit cards offer the additional advantages of cash back and a streamlined payment system (funneling all of your utilities through a single source rather than have a scattered series of payments throughout the month).

Even if I had a credit card, I'd assume it would work the same way (i.e. a direct debit)?

I have no problem with direct debits - they are actually quite favourable to the consumer, as long as they come out on the date they say they will, not 5 days early on occasion!

I'm sure they would be directly charged to your credit card, but the huge benefit to you (and your situation in particular) is that even if the company charges early by 5 days, you will have at least 20 more days before the actual payment to the credit card company needs to be tendered. You will have ample time to allow paychecks to be deposited or to transfer money into the appropriate account. It's essentially a shield against over drafts and makes bank holidays irrelevant to when you need to worry about paying utility bills.

 

[neiltc13]

Credit cards already offer most of those protections, at least substantially so.

Many companies will charge extra if you don't pay by Direct Debit.

Many of the benefits of credit cards don't kick in until you spend £100 as well. For example, when you spend over £100 on a credit card, your can then reclaim any losses from the credit card company rather than the retailer if something goes wrong.

BT for example charges £1.80 per month to customers who do not pay by direct debit.

Direct Debit isn't simply telling the company you want to pay your account number and bank, it creates a constant link between your account and the company you are paying. More info here:

http://www.thesmartwaytopay.co.uk/

 

[andalusia]

Sometimes my statements show the transaction without the money actually having left. So it's like a ghost transaction until the date it's actually completed. Perhaps yours is like that?

 

[bruinsrme]

Pay bills on a credit cards and let the points build up.

 

[CalBoy]

Many companies will charge extra if you don't pay by Direct Debit.

Many of the benefits of credit cards don't kick in until you spend £100 as well. For example, when you spend over £100 on a credit card, your can then reclaim any losses from the credit card company rather than the retailer if something goes wrong.

BT for example charges £1.80 per month to customers who do not pay by direct debit.

Oh that's unfortunate. Direct deposit and bill pay have typically been trumpeted here but companies don't charge more for credit card transactions for the most part these days.

Direct Debit isn't simply telling the company you want to pay your account number and bank, it creates a constant link between your account and the company you are paying. More info here:

http://www.thesmartwaytopay.co.uk/

Yeah that's like ebill pay here. I've never been forced to do it or pay an extra charge if I didn't use it or if I used a cc instead.

Although if one's phone bill is high enough the cash back could easily defray the penalty fee.

 

[borisiii]

A clause of the direct debit guarantee which may be of interest:

If an error is made in the payment of your Direct Debit, by the organisation or your bank or building society, you are entitled to a full and immediate refund of the amount paid from your bank or building society.

Since a direct debit is managed by your bank, not the company receiving the payment, it is your bank that you need to deal with. You authorised your bank to make a payment to Orange on the 23rd. They made a mistake in taking the money from your account before the agreed time. The direct debit agreement entitles you to a refund when a mistake is made, and a reimbursement of any consequential losses (e.g. overdraft fees). Contact your bank explaining the situation and what you expect them to do. They are bound by the agreement to help you, so they should be cooperative. If the person you deal with isn't helpful, threatening to take your problem to the financial ombudsman will invariably lead to a speedy resolution. HTH.

 

[rdowns]

While I do all my banking online, no company gets access to my checking account. I pay as many bills as I can with credit card (points or cash back) and the rest through my bank online.

 

[callmemike20]

Many companies will charge extra if you don't pay by Direct Debit.

Many of the benefits of credit cards don't kick in until you spend £100 as well. For example, when you spend over £100 on a credit card, your can then reclaim any losses from the credit card company rather than the retailer if something goes wrong.

BT for example charges £1.80 per month to customers who do not pay by direct debit.

Direct Debit isn't simply telling the company you want to pay your account number and bank, it creates a constant link between your account and the company you are paying. More info here:

http://www.thesmartwaytopay.co.uk/

In America, many companies charge "convenience fees" for paying a bill online or through direct debit. It is counterintuitive.

For example, Ticketmaster charges $2.50 to print your ticket online instead of having it sent to you.

My electric company (I believe that's who it was) charged me $2.00 to pay online with a debit card.

 

[kolax]

I'd cancel the direct debit and pay monthly by card, but they whack a £3.80 charge on for not paying by direct debit..