I was wondering if Choice can start a campaign for companies who direct debit. We are pensioners and have made our lives (supposedly) easier by allowing companies to debit our account for payments due. This works perfectly except for companies that take out their money several days earlier than the bill is due. This makes it very difficult for us to know how much money is in our account and how much we can afford to spend on other items…like food. We cannot budget if companies continue to take money before the due date, leaving us short, or worse still, not enough money in the account to pay for an account that is due. Many companies these days will only deal with you if you allow them to direct debit (obviously they want to ensure they get their money!), but is there a law that says they can basically take it whenever they want??? Would really appreciate your feedback on this.
Welcome to the Community @QuiltingBear
I share your concern about this. My broadband ISP sends an invoice stating a due date, but then says they will debit the amount owing up to four business days before the due date.
Anyway, I just always try to keep an amount in my working account to cover expected direct debits, or an available credit below the limit if the direct debit is on a credit card.
Welcome to the Community @QuiltingBear,
Direct debits can be processed anytime the business desires within their T&C. Some are clear they take money early - eg Vicroads will process a direct debit rego renewal about 2 weeks before the due date and so states that.
My advice is to read the T&C from the ‘offending businesses’ as well as their direct debit authorisation form. Reality is their billing systems are automated but many if not most companies can enter a billing date of the customers preference, such as the 8th of each month.
Another twist is some process the DD at the beginning of the business day (eg sometime between midnight and (eg) 8:00AM, and some process it at the end, (eg) 5:00PM.
All our card issuers aligned our billing cycle to a coordinated date arranged with phone calls. If you have a business debiting early and it is for example a conflict with a pension payment or other income paid, say fortnightly, try asking them to set their billing cycle date back those few days to account for the difference.
I stopped direct debits years ago because it cost me so much with companies just taking money at end of service or the trifecta where they take the money out early, pushes your account into overdraft, get charged the overdraft fee, a missed payment fee and and overdraft transaction fee.
Getting those while on minimum wage meant 2 days without food that week.
No way I’ll do it again.
I set recurring reminders up on my phone for every regular bill I get. The only odd ones are gas and power but I’m in the habit now that as soon as I get the bill I set the reminder.
Haven’t missed a payment since and haven’t been gouged from predatory fees either.
I had to get very firm with my ISP not long ago as when I upgraded my service with them I used my credit card online which they instantly and without my knowledge used to set up a direct debit.
That’s one thing if choice has some teeth is to make it easier to stop and or remove a direct debit without the need to set up another form of automated payment in its place. I can’t imagine that the way these companies operate quite a lot of people won’t resist too much and reluctantly continue with the arrangement and or don’t know how to articulate an argument well enough. That in itself is telling of the behaviour of these companies that you need a well articulate argument and quick wit rebuttals to their bs to have a third party access to your bank account removed.
I love direct debits, mainly. I have a budget set up and know exactly when things are (supposed) to come out. A day or so either way is fine, this one was 4 days early and the due date was a Tuesday. Many companies will only allow you to pay via direct debit (insurance companies, telstra etc.,) and these places are fine with when they take my payment, it is just the occasional business that screws up my budget, and this one did! I agree that you should have a choice, but I also can see the benefit from the businesses point of view. As much as it is annoying for us when money is taken from our accounts early, many, many businesses have spent hours and hours and a lot of money chasing people who will not pay a bill on time, so I can fully understand the reason for direct debits. Even with direct debits people have to ensure the money is in their account, and I am guessing that businesses still chase their tails when accounts do not have the funds desired. Not too sure what the answer is! Maybe a law stating that the money must come out on its due date regardless of which day of the week, or weekend, that happens to be. With today’s technology any business is capable of setting up direct debits to come out on the due date and not necessarily a week day. Maybe when a direct debit is due they have to get your permission first and not just take it???
I checked my companies T and C’s and their only comment about debits was - ’ 1. Where the due date is not a business day, xxxxx will draw from your nominated financial institution account on the next business day’. This is a long way from 4 days early, especially when the due date was a Tuesday! I will be contacting the business and see if they can come up with a suitable response.
Good plan, that. I hope you will let us know if you get a rote form response or one with substance. FWIW I had a similar issue a few years ago and called the company out. They apologised (costs them nothing) but they changed their operations to never take their DD earlier than the due date.
My reference to Vicroads taking them 2 weeks early? Their reasoning is to assure it goes through (some DDs take multiple tries) and gets processed in time so the rego plate does not get added to the naughty bin with fines improperly imposed, or unnecessary roadside discussions with police happen that still show it as unpaid because of systems delays.
Whilst direct debits can be a desirable manner for some for payment of bills, there can be pitfalls if something goes wrong in the processing.
It is a fairly common event that overnight batch processing by organisations goes wrong. Sometimes the processing involves payments missed. Or sometimes double processed with an erroneous rerun.
It can be bad for the customer when this happens. For instance one could lose their pay on time discount for things like power bills. And then have to spend possibly hours on the phone trying to sort it out.
And very bad for things like car registration. If on the day after the rego expires, the car is unregistered due to payment not received, the highway patrol cars will be out there with their number plate reader cameras with you car on the list. Get pulled over, and it will be an on the spot fine around the same amount as the unpaid rego. Plus, the car cannot be driven.
And has been said previously, whilst you don’t have to worry about manually paying the bill, you have to manually keep track of what bills may occur, and often the amount may not be known, and you have little control of when the debit will occur. I prefer to be in total control of when and how the bills will be paid. I then find there is no possibilty of problems outside of my control. Or insufficient funds.
I certainly will post any response I get on here, could be interesting! I am surprised about Vicroads. Here in Queensland I get notified via email of my renewal date a month in advance. I then get another email reminder the week before. I always pay rego on the due date manually through the Qld portal and have never had any hassles as I get an immediate email saying the my rego has been paid and here is my receipt. If I got pulled over by the cops I can just show them that email and all is good. Does Vicroads not have a portal like that? I will not direct debit some bills for just the reason you stated of multiple tries and risk being overdue. Electricity is another one I will not DD.
I understand there are pitfalls and these can create untold havoc for both parties. We, as a people, have very little control over 90% of our lives (regardless of what we may think to the contrary), so I have everything sorted out in a spreadsheet with amounts and exactly what date the payment is due. Nothing gets missed, but DD’s can screw that up in an instant if taken too early. I had another occurrence recently with RACQ and a DD. They sent me a reminder a month prior to its due date. The email accidently got binned and then the bin got emptied! They sent me a reminder a week before the due date of the DD and I did an online chat with them to get another copy of the account as the reminder had no amount on it!?! When I asked them why there was no amount on the reminder, they said that prices change each year and they have no idea of what the cost is going to be. Excuse me? You sent me a bill with an amount, why can’t I get a reminder with the amount when you already know what the cost is going to be? Oh no, that is not the way we work!! This bill was due almost 2 weeks ago and they still have not taken their DD, so I have to constantly ensure between pension payments that the money is there for when (or maybe if) they want to take their payment. I think they will be getting another ‘chat’ or phone call to find out what they hell they are doing!
They do, for manual payments however made and other routine matters like checking if one has demerits or how many, license details/renewals, etc. They also add surcharges to cards for inline payment.
We get a reminder well ahead of the rego due date but also the warning they process direct debits ‘up to 2 weeks’ early - which means 2 weeks early
Damn. Yes, you do have to pay a surcharge for paying online. At the moment that is still preferable (and somewhat affordable) to pay, rather than money going early. At least they are upfront about the 2 week lead time and you can budget for that. I guess all of these companies have to allow for people who never, ever, pay an account on time, or spend all their money on ‘whatever’ and don’t leave enough aside for bill payments. Such a vicious circle! As per usual it is the non-payers who make it extremely difficult for the payers.
I pay my Vicroads rego using Bpay. No surcharge there.
Sounds like a plan, thanks for that!
A few years ago I scheduled a payment for the same day that my pay would be placed into that account. The Bank took the scheduled payment out at 05:00 am, before my pay went in, so for a few hours within that same day, the account was overdrawn. The scheduled payment was not honoured by the bank, the account attracted an overdrawn fee and there was even interest charged on that statement.
I didn’t believe that could be legal but I did not have the time or energy to take on the bank. ‘Which bank’? One of the Big 4.
I have noticed that scheduled payments are now taken out later in the morning, within normal business hours.
I don’t follow your post. Either the direct debit was rejected due to insufficient funds, or it was allowed by giving a temporary overdraw facility, for a fee.
Can’t be both.
I get what you are saying about timings. They vary so much between businesses. Some are first thing in the morning, some around midday, and others near close of business. Wish they all had a set time!!!
In the past it made sense to action a direct debit around 2 days before a payment was due, as it takes a few days for the direct debit to be processed and appear in the businesses bank account. If they were actioned on the day of payment and received after the payment date, it could be seen as a late payment. Late payments can trigger penalities and/or termination of services. Notwithstanding this, processing a few days early also allows notification that a payment failed, such as due in insufficient funds, prior to the payment due date.
However, if the business and payee accounts support Osko, payments could be processed and received on the due date. But, processing payments by direct debit on the due date would only work if every debtor account supported Osko. As they are unlikely to, businesses will continue to action direct debits a few days before due date to ensure late payments aren’t made.
For manual payments by bank transfers actioned by the payee, banks usually advise to allow 2 days for monies to appear in the recipients account.
Having been involved in IT for many years, there are so many dependencies on when processing can occur. No point in processing data if it has not accumulated yet. Or arrived from external sources.
To try and pin it down to specific times is a nightmare. And to coordinate those times with other parties, forget it.
The best rule of thumb I use is to not commit to pay any bill, or schedule a payment or transfer unless the money is actually verified to be in the source account.
Further on this subject. In September when this particular direct debit was due, the money was taken 4 days early, but NOT by the company to which I have the account, but by a third party. On the due date I received an overdue notice from the company to whom I owed the money.
I waited until the same time this month to see if the direct debit in question would come out early, it did. 4 days early again. I immediately contacted my supplier and explained the situation to them. They responded very quickly, apologizing to me and stating that they would cancel my direct debit and allow me to transfer the funds - which will be done on time each month. They also stated that they had no control over when the funds would be taken from peoples account by their third party. Whilst I think the third party should be held accountable, I am very happy with the outcome!