Why you can't trust your online bank balance

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If you rely on your online bank balance to tell you how much money you have left to spend, be warned; this accounting slip-up could push your finances off course.

Last Friday I lost my Santander bank card. as well as be annoying and inconvenient I was worried that the card may have been used by someone quite easily because it is contactless and purchases of up to £20 can be made without a pin or signature.

I thought I'd left it in the Tesco I had been to earlier in the day, where I had spent £12.99, so called the bank and cancelled my card. Unfortunately, the lady on the phone couldn't see an updated list of transactions so asked me to check online on Monday and call back if any payments were amiss.

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I check on the Monday and found two other payments, both to Tesco, of £13.04 and £15.00. I called Santander to explain the situation to them and find out when these transactions had been made. All the while I was worried that further rogue transactions were yet to appear.

After a long and drawn out process of bouncing to different departments I was finally put in touch with a very nice man called Darryl who seems to be the only one in Santander HQ who can tell you when transactions on your account were made – and whether they were made after I lost my card.

The strange thing was, the two Tesco transactions that appeared on my account on Friday night had been made 'at some point in the past six months', by me.

I know what you're thinking because I thought the same: how can transactions made so long ago they can't even give me the correct date be showing now. How come the money was only just taken from my account now?

Darryl explained that this is a hitch in retailers' systems.

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When you purchase an item, the money is deducted from the amount available to spend in your account straightaway but it is not typically deducted from your actual balance – ie. the amount in your bank account – until a couple of days after.

This is a standard timeframe for processing payments.

What had happened in my case is that Tesco did not take the payments of £13.04 and £15.00 in the usual two day window and the money I had spent became available in my account again.

This doesn't mean that Tesco had forgotten I owed them this money, they just took it months later, 'probably when they processed a batch of receipts', said Darryl.

Thankfully there was money in my account to cover the payments but I asked Darryl what would have happened if my account had tipped into an unauthorised overdraft. The short answer is, I would have been charged.

For those living on a tight budget, if you're a stickler for knowing what's going in and out of your account, or just don't want to see your bank account tipped into the red, relying on your online bank balance to tell you how much you have to spend isn't a good idea.

Going old school

I've taken a leaf out of my nan's book to make sure I'm not taken by surprise by a payment again. She used to make a visit to the building society with her passbook when she needed money and wouldn't make a note of what she had spent.

I've now set up an app on my phone that lets me record incomings and outgoings, separated into various categories so that I can see exactly what I've spent and, more importantly, give me the correct figure when it comes to how much I have left.

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Why you can't trust your online bank balance
Once you have opened a current account with a bank or other lender, you will get a steady flow of emails, letters (and maybe phone calls) offering you a savings account, loan, mortgage, ISA etc to go with it. But while it may be tempting to have everything in one place, it's better to do the legwork and shop around for the best financial products. You can compare interest rates on loans and savings accounts in the 'best buy' tables in the newspapers, or look online on comparison sites. Remember you can still easily transfer your money between accounts, even if they are not with the same financial institution. 
Whether you want to apply for a new mortgage or refinance an existing one, your bank will probably be very happy to give you an instant quote in the hope that you will go with them. They may not tell you that you can shop around at other lenders. A mortgage broker can give you an overview of the best interest rates on offer, and might be able to cut you an even better deal him/herself. 

Want to cash in your jars of change that are sitting on your shelves at home? Many banks are not very keen on coins. They often only take it from their own customers. You will have to sort it into different denominations and put the coins in the bank's bags in set amounts (for example, £1 for coppers, £5 for silver, etc). Some banks only take a limited number of bags a day, or won't take any at busy times. Others take a different view: HSBC has free coin deposit machines in many larger branches where you pour your jar of coins into the machine and it counts them and automatically credits your account. Barclays, NatWest and RBS also have machines in large branches in city centres.

Bank employees now have a duty to point out that they only advise on the bank's products and don't offer independent financial advice. What they won't tell you is that even the advice they give you about the bank's own products should be treated cautiously. Bank staff are often undertrained, underpaid and overworked. (You could ask for the employee's qualifications before getting advice.) So do your own research and/or find an independent financial adviser.

Nothing is set in stone. Your bank won't tell you this, but sometimes it will waive a fee, for example an overdraft or an ATM fee, depending on the circumstances. You have nothing to lose by asking, if you can argue persuasively why they should waive the fee. Citizens Advice says your bank should treat you sympathetically if you can show financial hardship.

As stated in the previous slide, some things are negotiable – such as interest rates or waiving fees – if you can make a good case for it. In that instance, talking to an employee in person is better than filling in a form online.

If your account is overdrawn and you get paid, your bank could use this money to pay off your overdraft without your permission. However, you have a right to ask them not to do this so you can pay your rent or mortgage first. This is called first right of appropriation. You have to ask your bank in writing, and you'll need to write to them with new instructions every time money gets paid into your account. Make sure you write 'first right of appropriation' in your letter.

If money is mistakenly credited to your account, your bank or building society can recover the money, assuming they do this within a reasonable time. But you may be allowed to keep the money, for example if you didn't realise the bank had made a mistake and spent the money in good faith. You would have to prove that you spent it in such a way that it would be unfair to ask you to pay it back. You can complain to the Financial Ombudsman if you think your lender is being unfair in asking you to repay the money.

If you do have to pay it back, you could try to reach an agreement with your bank to pay it back in instalments without interest being added.

The Financial Ombudsman Service has more advice on what happens when payments have been credited to the wrong account. If you did something wrong - for example, by entering the wrong account number - rather than the bank, the Financial Ombudsman may still uphold your complaint. They consider whether the financial institution made it clear to the consumer that only the bank sort code and account number are used to process the payment, rather than the name of the payee. They will also ask whether the lender should have realised that the consumer had made mistake, and once the problem came to light, did the firm take reasonable steps to try to get the money back from the recipient.

If too much is deducted from your account, your lender may have to refund the full amount of the payment. For example, if the money is taken through a direct debit or credit card payment for a hotel room or car rental. When deciding whether the debit was reasonable, the bank or building society will take into account your previous spending pattern. But the bank doesn't have to refund the payment if you agreed the amount beforehand or were informed of the payment by your lender at least four weeks before.

If you don't have enough money in your account to cover a direct debit payment, your bank may not make the payment. It doesn't have to tell you that the payment hasn't been made, so the onus is on you to keep checking your account. If, on the other hand, the payment goes through, you may be charged for an unauthorised overdraft.


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