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11 Feb 2020

Are you paying your credit card off earlier than you need to?

NatWest has been taking some customers' direct debits 10 days early - find out what your bank's policy is

Thousands of NatWest credit cardholders will soon have their direct debits taken later in the month, after some longer-standing cardholders were found to be paying 10 days before they needed to.

Some customers who'd opted to clear their NatWest credit card bill in full each month were seeing money taken out by direct debit 10 days before the due date.

From March, NatWest will apply the same rule to these loyal credit cardholders as it does to newer customers, taking the money owed on the due date instead of 10 days before.

Here, Which? explains what's changing for affected cardholders and reveals when the other major banks take direct debit payments from their credit card customers.

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NatWest extends repayment time

NatWest has written to what a spokesperson described as 'a pocket of customers' to say it was reversing its historic practice of taking early repayment. When Which? asked how many people were affected, the spokesperson was unable to give an exact figure but said it was under 10,000.

The letter to affected cardholders said: 'In response to customer feedback, from your March statement onwards, we will take your full direct debit on the due date, 10 days later than we do now.'

NatWest didn't specify exactly which customers are affected but Which? understands it's people who have held their credit cards for several years.

The spokesperson said: 'Customers didn't get less credit [as a result of paying early] and the date that debits were taken was communicated well in advance.

'Customers always had the option to repay balances at any time over the phone, via the app, via online banking, etc. There were no additional interest or charges.'

What to do if you're affected

NatWest cardholder statements will continue to show a 'claim' date and a due date.The claim date is when the money owed is 'earmarked' in the customer's account, meaning the cash is still there but you can't spend it on anything else.

The Financial Conduct Authority told Which? this is permitted under section 78 of The Payment Service Regulations 2017.

Cardholders can check their direct debit due date on the NatWest app, website and paper statement.

If you are affected by the change, NatWest has advised that you 'ensure you have enough money in your bank account to cover your credit card bill' in order to avoid being hit with a late payment charge and suffering damage to your credit score.

You also have the option of paying some or all of your bill ahead of time, but you must do this at least six working days before the due date in order for the direct debit amount to be adjusted.

NatWest told us that some customers have opted to stick with the early repayment date.

When do other banks take direct debits?

Which? spoke to other major banks to ask when they take direct debits for credit card balances.

For most banks, the money leaves on the due date. However, if this falls on a weekend or a bank holiday, there is a mix among banks between taking the money on the business day before or the business day after.

Sainsbury's Bank, for example, gives customers longer, while Santander takes the money slightly earlier.

When does your bank take your credit card direct debit?

Nationwide said: 'We do not take direct debits in advance of the payment due date. We do reserve the funds from the current account it will be taken from, similar to an authorisation on a purchase. The payment debits the customer account on the due date (or after, if this falls on a weekend).'

Sainsbury's Bank said: 'The majority of our customers pay by direct debit which is a practice we encourage as part of good account management.

'Direct debits are taken in line with BACs scheme rules, which means the direct debit is taken on the day the customer has advised or within three days after that. Never before.'

Santander said: 'Direct debits are collected slightly earlier than the due date, so we know if there is an unpaid direct debit (where there are for example insufficient funds in the account) before the next credit card cycle begins and can accurately reflect the customer's position and interest.