SAVE YOURSELF SOME INTEREST
Banking transactions should get faster and save us money from this month. Since 1 January a new EU law makes banks move our money around much more quickly. And that should help us avoid penalties and earn a bit more interest.
The EU law says that money moved from one bank or credit card account to another must arrive by the next working day. In the UK we dont have a next working day system money either arrives almost instantly through Faster Payments or on the third working day through what is called BACS. So UK banks will have to use Faster Payments for almost all transactions and they will arrive almost at once.
For example, if you pay your credit card online or by telephone banking then it will be credited that day. If you ring up to transfer money to a relative or to pay a bill that will also leave your account that day and arrive the same day at its destination. If you go into a bank branch and pay off a bill with cash which some banks used to hold on to for three days that will now clear instantly. Standing orders will also leave your account and arrive in the destination account on the same day. These changes should help us avoid £12 penalties when a credit card deadline is missed and cut down on overdraft charges.
For example, if you pay tax through self-assessment you will notice that a payment due to arrive on 31 January, which is a Tuesday this year, will also leave your account on that date. Under the old system it would have left on the Friday before, so the money is in your account for four more days.
The system limit for Faster Payments is £100,000 but some banks impose their own lower limits £10,000 is common for online or telephone banking. If you have to make a bigger payment then you can split it into several smaller chunks below the limit. Otherwise the bank will have to send it through another system called CHAPS usually reserved for large and legally sensitive payments such as a house purchase. Normally there is a charge for CHAPS service but if the bank has not warned you that it will charge in future for payments over a certain size then it cannot make you pay.
Some savings accounts and almost all cash ISAs are not covered by the new rules. But instant access unrestricted savings accounts should be included. The same rules apply for payments to any account in the 27 countries of the EU.
If your bank or building society is not following the rules complain in writing and take your case to the Financial Ombudsman Service.
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