Like a lot of people, I don’t have much left at the end of the month, but I can normally juggle things around and move money back from our joint house account to my sole account to get through the last few days before payday.
I receive text alerts from my bank if my overdrawn balance goes beyond a certain limit (well before it hits the maximum) and I check my account online every day towards the end of the month to make sure I am still within my agreed limit. In fact, I am very aware of what my account is doing – except it seems, late at night.
The charges levied by my bank, First Direct, have been applied when card payments, which I might have made three days before, come out of my account in the evenings – AFTER I have checked my bank balance but BEFORE a 9pm cut-off point for debit card payments that I was previously unaware of.
In other words, if I check my balance at 8pm, then go to bed feeling reassured, I might still wake the next day to find I have gone over my limit and been whacked with a £25 fee – because a payment I made some days ago has come out of my account between 8pm and 9pm.
'Real time' banking
I called First Direct – whose staff, in fairness, are always helpful and readily accessible – and I was told this was a consequence of ‘real time’ banking. (That’s real time, except when the debit card payment from my bank account is delayed by three days. It doesn’t necessarily show up as a ‘payment pending’ either – which is apparently, the norm).
First Direct said it gives you until 11pm to rectify your account back to within its agreed overdraft limit before it will apply the £25 daily charge. So that means, unless you check your balance between 9pm and 11pm every night, you are liable to be hit with it.
First Direct also only offers an alert service for when you are within a certain range of your overdraft limit, rather than over the limit itself. The latter would be more useful, allowing customers to immediately make arrangements that day to bring themselves back within the limit and avoid fees (as I mentioned, if you rectify the transgression before the end of the day, First Direct won’t charge you).
So it seems that unless you have a forensic memory of every single card payment you have made and check your statement religiously at 9pm every working day, you can still be stung by payments taken out of your account late at night that take you over your limit, leading you to incur the subsequent charge.
As a financial journalist, I put a call into the Payments Council press office and asked if First Direct’s policy is the same as that of other banks. They told me there was no industry-standard time by which card payments must come out of your account on any particular day. This means it’s conceivable that some people could see debit card payments being taken at 11.59pm, giving them no chance at all of rectifying their balance that day.
So if, like mine, your current account can be finely tuned, it’s advisable to give your own bank a call and find out.
In the meantime, while a minefield for consumers, the current arrangement seems convenient for the banks. When is a customer least likely to notice a payment taking them over their limit? At night, of course when the payment can do the most damage and is most likely to lead to an over-limit charge.
My new bank charges campaign
It is still possible to reclaim unauthorised overdraft fees if you are in financial difficulty, but technically I am not. However, I can still propose a new and fair bank charges campaign. Try this:
- All debit card payments to be taken from customers’ accounts at the same time the payment is made to avoid the problem of not knowing when a payment will come out.
- A text alert service (real time!) at the point when someone goes over their unauthorised limit with a chance to rectify it that day without being charged.
These two measures, which are surely not impossible to implement, would save banking customers like me millions of pounds a year collectively. But I wonder, that with banks making so much money from the existing arrangement, whether it will ever happen?
Fed up with your bank? Under the Current Account Switch Service introduced in September last year you can now switch in seven working days. Whether you are overdrawn or in credit, there are some great deals to choose from at MoneySuperMarket’s current account channel.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.