Looking to switch but worried about direct debits

Something you could potentially miss being so early.

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I think the Monzo service is great, as you can tell from most of my posts on this community, but how direct debits are handled is only think Monzo have taken as a feature and made worse rather than better than ‘legacy banks’.

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That’s one advantage of Android: Notifications stay around on the lockscreen until you interact with them. I love that! (Sorry for going off topic!)

They do for iOS too if you have not unlocked the phone. But can go off screen depending how many you have had from other apps etc.

It’s worth noting this can be resolved another way. Having a notification the day before advising they are due out the following day.

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Exactly… I think we can all agree the handling of standing orders needs to improve. That said, a standing order failing isn’t a disaster. You can just send it manually later and it’s identical. DD’s are often associated with fees, adverse action and credit score impact if they don’t work, so failure is much more serious (tho the DD guarantee should help you offset this and fix the damage).

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I wasn’t aware that the DD guarentee could help in a failure like this. I agree with standing orders though.

At least credits are made before debits for the people who pay out on the same day.

For me I get paid on the 3rd Thursday of every month, confusing right? So I just schedule all my bills for the beginning of each month so they are paid off a week or so after I get paid to make it easier.

The credits before debits doesn’t always help depending on how you get paid. For me I use Squirrel.me and the money doesn’t appear in my account until around 9am. Sometimes earlier than this but nor early enough to be before the early time that direct debits go out.

Starling seems to wait patiently until the money is in my account. So it looks like they do queue up payments until money is available on the same day.

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Am I missing something? The DD guarantee doesn’t cover any late payment fees or credit score impact, does it? Or did I misunderstand you again?

There’s nothing explicit that it would cover that, but British law is often not so explicit. I’d expect that, in practice, the guarantee of a ‘refund’ would result in me being put back to where I had been if there was a failure.

To this end, I will note I had a DD failure once, and Barclaycard did exactly that - they refunded the late payment fee and ensured they didn’t report to CRAs. Of course, this was their failure to send the DD mandate, but I’d expect, in practice, this to happen with any reputable bank (maybe not a certain one named after two cities in east Asia) as the implicit intent of the guarantee is to ensure the customer suffers no loss for a failure.

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That would not be my expectation, nor was it my experience in the past, nor do I see how that would work.

If my Utility warehouse direct debit was declined by Barclays because of a fault on their end, then how would Barclays prevent utility warehouse from reporting a missed payment?

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But if you’ve earlier argued that the current DD behaviour is not broken, why would Monzo refund fees and try to change credit reporting? From Monzo’s perspective, nothing has failed.

I also agree with nanos that I’m pretty sure this isn’t how the DD Guarantee works in any case. It’s a guarantee against the debiting organisation making mistakes or fleecing you.

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I said that if it failed I’d expect things to be made right for me.

I didn’t say I’d expect it to be made right if I didn’t have money in the account.

Agreed completely. I’m only referring to what I’d expect to happen if a DD failed. Not if it was declined for insufficient funds.

I was thinking about this a bit more. Clearly setting the right expectations matters. Perhaps Monzo should say on the Direct Debits screen ‘please have funds available by 00:00 on the day your Direct Debit is scheduled’ or similar?

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I’ve been waiting for about 2 weeks for the AA to charge me for my annual membership by Direct Debit. I deliberately keep most of my money in Pots so getting a notification today, advising me I’d need to add enough money to pay the Direct Debit of £x was really helpful! (I don’t pay much by Direct Debit so this is all very exciting for me! :stuck_out_tongue: )

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Honestly, and this is one place where I know Monzo have said no (though decisions can be reconsidered), but I think one thing that should be considered is allowing the main account balance to go negative (and not require any overdraft, and not charge any overdraft fees if they do have an overdraft) if there is money in a pot to cover it.

My argument - it is one account, and money in pots is still money in that account. DD’s, especially, aren’t normal spending. Likewise, the account as a whole isn’t in overdraft, so overdraft fees make little sense in this situation.

Perhaps augment this with regular notifications along the lines of ‘your main balance is negative and is being covered by money in pots, please transfer money into your main balance ASAP’.

Maybe even have a ‘decline card transactions that would need covered by pots or overdraft’ toggle, but still allow the more critical DD’s to be covered this way - very few people would ever want a DD declined if they have money to pay it.

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that is logical, and exactly what Starling do

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Most (if not all) legacy banks have a DD retry system in place. I think they added it so they didn’t get called out for the fees.

However, I would still like Monzo to add even without fees. They won’t offer some of us an overdraft :frowning:

Liam

I didn’t know that. This might be the first time I’m saying this - Starling is handling this much better than Monzo. That’s probably going to be the only time I say those words, but still :slight_smile:

They’re taking a highly risk-averse stance for now. I have over £10k in credit limits with American Express, and significant limits on other credit cards (just got £4300 from Virgin Money) and Monzo hasn’t offered me any overdraft. Other people on here have been getting tiny overdrafts - £100 or so.

They did post they plan to re-evaluate the limits and be more generous in future.

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I agree with all of the suggestions here, it would make much more sense.

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Yeah, I wasn’t really expecting they offer me one (my credit report is probably a big no-no to all lenders right now), but it’d be nice if they told me no, rather than nothing appearing anywhere.

On Nationwide, I was pretty much reliant on the retry. Especially for PayPal payments, they don’t actually tell you when the direct debit’ll post.

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