Bank Charges And Cancelling Direct Debits If The Money Is Not Available
While we all await the result of the appeal by the banks to the House Of Lords over the bank penalty charges case charges continue to be applied. For many people these charges make a huge hole in their financial budgeting and avoiding the additional costs of bank charges can be crucial.
Direct debit payments make life much easier and simplify the task of regular bill paying but they have a sting in their tail if you are running close to your agreed overdraft limit. An attempted payment of a direct debit can leave you out of pocket and still have the debt to pay. An example would be that we have a credit card that requires a direct debit payment of £50.00.
Unfortunately, for whatever reason, there is not £50 available to be withdrawn from your bank account. The direct debit is requested. The bank makes the payment but then discovers that the money wasn’t there and reverses the payment. The net result is that the payment has not been made but the bank will apply a penalty charge of £35.00 for attempted withdrawal when funds were not available.
The credit card company will charge you £12.00 for failing to make a payment and if you were near your credit limit on the card they might charge you a further £12 for going over your credit limit as a result of the payment not being made. So, for a bill that has not been paid you have been charged £35+£12+£12=£59.00 for nothing. You still have to make the payment of £50 to the credit card on top of all these charges and the final cost of paying £50 off your credit card will be £109.00.
There are a couple of lessons to be learned here. One is always keep enough in your current account to cover all your expected direct debits but the other lesson is that if you are sure a direct debit is going to fail then cancel it before it goes through. Make other arrangements to pay the debt but avoid the direct debit failing because that just costs you money for no gain whatsoever, except by your bank and the credit card company. I think it is a reasonable assumption that you need the money more than they do.
The final lesson is simple. The credit card company is not your friend. They are interested in you ONLY for the profit they can make from you. Work towards reducing your debts so you are in control of your life and your money, not them.
