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Quick question about direct debits


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Hi

 

Just a quick question regarding direct debits.

 

If some money is due to come out of your account by direct debit and there isn't enough money, do they bank pay it or return the direct debit unpaid?

 

Also if there isn't sufficient money do they try for a lower amount?

 

Also sorry about all the questions, how many times is a direct debit tried?

 

Any help would be appreciated.

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It depends on whether your account has the facility of going overdrawn, and how much overdrawn the DD would send your account, as to whether they pay it (and charge you) or not pay it (and charge you).

 

Most accounts can go overdrawn by £50 or so but there are some which won't go overdrawn at all, in which case it would be bounced even if it was for 10p more than your balance.

 

I don't think I've ever seen them fetching out a lower amount though. Maybe someone who works in a bank can confirm this.

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Also if the direct debit cant be paid due to insufficient funds, most places may try to collect 5-10 days after to attempt recollection. I would get in touch and let them know. If its more than 5 days before the DD is set to collect, they might be able to cancel the DD for you.

 

Attempts to collect the payment depends on each business. I worked for an insurance company and we only tried twice (initial collection and then 5 days later) Same rules applied for a mortgage bank I worked for, but they would allow for adjustment of the payment up to 5 days before collection - though it was your responsibility to get the remainder of the payment in before the next payment was due. If not the customer could cancel their direct debit, but were still responsible for getting a payment in before the due date.

 

I would call whoever youre due to pay and see what can or cant be done for you. Its best to be on top of the problem rather than waiting for them to chase you for it

Edited by alternageek
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Hi

 

Just a quick question regarding direct debits.

 

If some money is due to come out of your account by direct debit and there isn't enough money, do they bank pay it or return the direct debit unpaid?

 

Also if there isn't sufficient money do they try for a lower amount?

 

Also sorry about all the questions, how many times is a direct debit tried?

 

Any help would be appreciated.

 

They won't try to take a lesser amount.

It's at the banks descretion as to whether they pay it or not if it takes you overdrawn. But they will charge you, both for going overdrawn and I think they call it an unpaid item fee.

Even if they choose not to pay it, with it potentially taking you overdrawn they will charge you for 'bouncing it' (which will take you overdrawn anyway). Then they will clobber you again for being overdrawn because of their charges.

 

If you know you can't get the funds in there in time, cancel the direct debit. Then sort it out with the people it was due to be credited to.

 

Some banks require a DD to be cancelled at least 3 working days before it's due. Others you can do it right up until the actual day!

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They won't try to take a lesser amount.

It's at the banks descretion as to whether they pay it or not if it takes you overdrawn. But they will charge you, both for going overdrawn and I think they call it an unpaid item fee.

Even if they choose not to pay it, with it potentially taking you overdrawn they will charge you for 'bouncing it' (which will take you overdrawn anyway). Then they will clobber you again for being overdrawn because of their charges.

 

If you know you can't get the funds in there in time, cancel the direct debit. Then sort it out with the people it was due to be credited to.

Some banks require a DD to be cancelled at least 3 working days before it's due. Others you can do it right up until the actual day!

 

Nope, under the direct debit guarantee a DD can be cancel at any time. No exceptions.

 

http://www.thesmartwaytopay.co.uk/DirectDebitExplained/Pages/CancellingDirectDebit.aspx

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/27/27-directdebit-guarantee.htm

 

jb

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That's funny. My bank would not allow it. Yes you can cancel it at any time, but if it's within 3 days of a payment being due, they still stung me. However lately it's changed, so maybe the error of their ways has been pointed out!

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That's funny. My bank would not allow it. Yes you can cancel it at any time, but if it's within 3 days of a payment being due, they still stung me. However lately it's changed, so maybe the error of their ways has been pointed out!

 

My second link was from 2003 so if your bank refused to cancel a direct debit inside of 3 days of the payment after this date then they were clearly in the wrong and in breach of the guarantee. This does not surprise me.

If they wanted to be arsey they could of course insist it is cancelled in writing...

 

jb

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The moral is, avoid direct debits especially if your income fluctuates. I would rather have an overdue reminder than an automatic bank charge. Your creditors and your bank love direct debits because you are always the loser.

With internet banking and Bpay at your fingertips, take charge of your finances, don't let anyone else do it for you.

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