Lenders to offer same-day grace period for bounced payments

From Monday 1 September a retry process will be extended within the banking industry to help customers avoid late payment charges on their account.

The process means that when a customer’s standing order, direct debit or future-dated payment ‘bounces’ because of insufficient funds in the account, the payment will be processed again by their bank or building society later the same day.

This gives customers time to put money into their accounts so the ‘retried’ payment will be successful the second time around.

All participating banks and building societies will give customers until at least 2pm to pay cleared funds into their account, but this is the minimum that they will offer – some might offer a cut-off time later than 2pm.

Some lenders may also choose to include bounced cheques in their individual retry process.

Payments Council’s top tips

To help people manage their current accounts the Payments Council has produced a new guide that highlights what the retry process is; how it benefits customers; and advice such as:

• Review your outgoing payments and if any are regularly leaving your account on an inconvenient date, move them to a more suitable day.

• If you need to pay cleared funds into your account, the fastest way is by paying cash in to your own bank or by making a Faster Payment via your online or phone banking service.

• Customers should contact their bank or building society to confirm what the cut-off time is for them to get cleared funds into their account before the payment is retried.

• Payments via phone or online banking will generally go through as a Faster Payment. However, you should check this with your bank if your payment is for more than £10,000.

Bank and building society brands offering the retry process: