Banking - service fees with automatic payments

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Forums › Finance and wealth management › Banking - service fees with automatic payments

rayonline

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#240918 2-Oct-2018 16:05

Hi all, banks these days have the $0 monthly fees with their transactions accounts. They say service fees applies when you set up or amend automatic electronic payments. What is exactly this? Is this for when you pay a company like a power bill like setting up a direct debit authority? What about if you set up a new payee like you pay $20 every month into your savings account or you pay a family member $50 every Friday?

Edit - apologies mods. Please move this to the off topic. Am also trying to find the delete function and repost..

darylblake

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#2100188 2-Oct-2018 16:19

Personally I do not use Automatic payments. There is nothing wrong with them. I just prefer to pay the bills myself. The downside to this is 'if' I forget to pay a bill, and I pay it late, then I guess its my own fault. I very rarely forget though.

Banks usually charge a fee to create or modify any automatic payments. So if you change the date, or want to skip a payment or just alter the amount they charge a fee. Normally these fees are reduced if you modify them yourself using their internet or mobile banking tools.

If you have insufficient funds to make a payment then you get charged a dishonour fee. These are usually the ones that hurt and are often about 6x the cost of modifying an automatic payment.

I worked in a bank for about 5-6 years and it was a massive scam in my opinion. I would see a lot of not-so-well off people get charged a lot of fees. And generally the people who were more wealthy rarely seemed to have any issues.

Yes if you want to pay a set amount every week/fortnight/month/or 4weekly create an automatic payment. Direct Debits are just an authority that you have given the power company etc to take the amount owing out of your account on the due date. They need to advise you of the due date. But essentially they can just withdraw it using a direct debit system.

michaelmurfy

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#2100191 2-Oct-2018 16:21

I’ve never had a service fee for automatic payments on both my ANZ account and Kiwibank account. The service fee at ANZ is related if a staff member sets up or amends an automatic payment however this is on a case by case basis - for example, they’re far less likely to charge elderly who don’t use internet banking to amend an automatic payment on a freedom years package.

This however all depends on the account type. I know on both Freedom and Go accounts at ANZ there are no fees for amending by self service channels.

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rayonline

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#2100195 2-Oct-2018 16:27

I have been reading online. All the banks don't charge this service fee to create or amend a AP online. Westpac say they do with their "Everyday" account but they provide free "manual deposits" or if other people deposit to you over the counter.

https://www.westpac.co.nz/bank-accounts/transaction-accounts/westpac-everyday/

Yes, the ANZ Freedom package is free for SuperGold members like my parents. But anyone with a Freedom account pays $0 for manual transactions.

What is the AP? If one wants to pay a friend or a family member regularly is that also considered an AP?

Edit. Setting up an AP is it only when you do it with the bank in question. What if you go to a 2Degrees webpage log into your account and set up DD?

Edit #2. Ended up ringing them even thou it was listed under electronic setting up and amending AP referred to a person on the phone or in a branch. So online AP is free. Hopefully 2Degrees AP will go thru cos online it says only need the DD authority form if your bank is not listed in the drop down box. My father had an issue that Contact Energy couldn't access his CC until a paper form was filled out.

Dratsab

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#2100219 2-Oct-2018 17:22

When I was with Westpac I used to get charged every time I amended a payment and it annoyed the heck out of me. No such charges since moving to NZ Home Loans, who bank through Kiwibank.

rayonline

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#2100220 2-Oct-2018 17:23

Dratsab:

When I was with Westpac I used to get charged every time I amended a payment and it annoyed the heck out of me. No such charges since moving to NZ Home Loans, who bank through Kiwibank.

Person said suspension or amend has a charge. Set up and close doesn't.

eracode

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#2100225 2-Oct-2018 17:29

Note that there is a difference between an Automatic Payment and a Direct Debit - they’re not the same thing.

AP is for a regular fixed amount on set dates, set up by the payer and is for a pre-defined period.

DD is initially authorised by the payee but activated by the payer and is for irregular amounts on non-fixed dates.

Sometimes I just sit and think. Other times I just sit.

rayonline

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#2100230 2-Oct-2018 17:34

eracode: Note that there is a difference between an Automatic Payment and a Direct Debit - they’re not the same thing.

I am doing direct debit with a company. Automatic payment what is this re: with a power / internet company? With a person or an account I can see what it is - pay someone weekly or monthly, or transfer $X amount to yourself to a different bank account / mortgage.

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eracode

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#2100268 2-Oct-2018 19:18

eracode: Note that there is a difference between an Automatic Payment and a Direct Debit - they’re not the same thing.

AP is for a regular fixed amount on set dates, set up by the payer and is for a pre-defined period.

DD is initially authorised by the payee but activated by the payer and is for irregular amounts on non-fixed dates.

Sorry tripped myself up on the -ee’s and -er’s.

Meant to say: DD is initially authorised by the payer but activated by the payee and is for irregular amounts on non-fixed dates.

Sometimes I just sit and think. Other times I just sit.

eracode

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#2100270 2-Oct-2018 19:20

rayonline:
eracode: Note that there is a difference between an Automatic Payment and a Direct Debit - they’re not the same thing.

I am doing direct debit with a company. Automatic payment what is this re: with a power / internet company? With a person or an account I can see what it is - pay someone weekly or monthly, or transfer $X amount to yourself to a different bank account / mortgage.

Sorry not quite sure what you mean.

Usually if paying power or internet etc, where the amount and payment date may change a little from payment to payment, it would be a DD.

APs are used where the amount never changes eg a loan payment of say $x per fortnight.

You can’t set up a DD to transfer money to yourself in another account or at another bank.

Sometimes I just sit and think. Other times I just sit.