Interest charges on Direct Debit billing?

Mr.Pink

Mr.Pink

Mr.Pink

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5 Jan 2007
Posts
613
How long have companies been doing this?

I have just spec'd some home insurance and went to pay and noticed that Liverpool Victoria apply 16.9% to anyone paying by direct debit.

No explanation. You can save yourself this fee by paying in one lump.

I always thought DD were the preferred method of payment for companies.:confused:

Is this standard and acceptable practise now?
 
Mr.Pink said:
How long have companies been doing this?

I have just spec'd some home insurance and went to pay and noticed that Liverpool Victoria apply 16.9% to anyone paying by direct debit.

No explanation. You can save yourself this fee by paying in one lump.

I always thought DD were the preferred method of payment for companies.:confused:

Is this standard and acceptable practise now?
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This is and has been standard practice on insurance (especially car insurance) for many years.
 
Yep, motor insurance has always been the same. Pay it off at the beginning and feel the pain, then it's done.
 
^^ What Clown said. You're effectively paying the full premium up front with a loan from the underwriters, whom you then pay back over the course of the year, with interest.
 
Jez said:
Almost all insurance companies require payment upfront, be that via a loan or dierctly. :confused:
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The rate they are charging is well above the normal.

My car insurance charge four times less to pay in installments.

I just hope the OP does not have to make a claim as the service I have received from them in the past has been abysmal, if non existent.
 
They have you over a barrel, you have a car you must have insurance and since they charge so blummin much for insurance a lot of ppl have to pay by DD as they can not afford to pay upfront.

BT messed up my DD and found out that they charge for handling cheques! dunno how long they have been doing this for though.
 
This will happen more and more as it's a way of beating the advertising standards agency.

Ryanair are the perfect example. They can say it's only a penny each way for the flight but that's because they factor in all other costs as "extras" even though you can't get on the plane without them. (They even charge you to print your own ticket!) named "online booking fee" lol

So now car insurance companies are doing the same LV save you money but only if you meet their terms and conditions and here lies the crux.... it's the "*" and small print all over again.
 
19% to pay up front?!

I always thought it was more expensive to pay monthly, and certainly don't recall paying any interest when paying mine upfront (Hastings Direct).
 
The reason they do this is because generally, a contract of insurance requires payment in full and up front. Thats simply how it works - you pay them the premium, they then take on the risk. It's unreasonable to expect them to cough up £5000 for a new sofa after yours floods or something when you've been with them a month and paid 1/12th of the expected premium.

So, insurance is paid in full at the time of policy inception.

However, there is recognition of the fact many people cannot or do not wish to pay up front. Therefore what you are offered instead is simply a loan - the insurance underwriter is paid in full and up front, and you pay off the money owed just like any other loan.

And because it is a loan, it incurs interest.
 
jas72 said:
Ryanair are the perfect example.
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No they're not. It's got nothing to do with 'extras', and everything to do with it being an interest-bearing loan. I dislike Ryanair just as much, but blaming them for stuff like this just adds fuel to their fire (this practice existed before Ryanair).

The answer is simple - shop around.
 
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