Your bank will now charge you for failed direct debit transactions. What does that mean?
Before we look at what it means, let’s look at what it doesn’t. It doesn’t mean that you’ll be debited if you try to transfer money to someone and the transaction fails for whatever reason.
What it does mean is that if you have set up or instructed a third party to periodically deduct money from your bank account, and there is no money in your account when the third party wants to make a deduction, your bank will charge you one per cent of the amount that third party would have deducted.
Your bank may also decide not to charge you the one per cent but simply impose a fine of N5,000 on your depleted account.
If, for instance, you set up savings app PiggyVest to deduct N10,000 from your bank account every Monday, you must ensure that you have up to that amount in your bank account every Monday. If not, PiggyVest won’t just notify you that the autosave deduction didn’t go through, but your bank will also fine you one per cent of N10,000 or impose a fine of N5,000 on your account for that failed transaction.
The same will apply to all direct debits. A direct debit is an arrangement you make with your bank that allows a third party (like PiggyVest, investment firm Old Mutual, Stanbic IBTC voluntary pensions, etc) to deduct money from your bank account on agreed dates.
Banks and third parties began notifying their customers on Thursday about the new directive from the Central Bank of Nigeria (CBN).
If you don’t always have money in your account and you have direct debits set up, you can protect yourself by stopping third parties from making automatic deductions from your bank accounts.
If you use PiggyVest, for instance, you can turn off the autosave feature and only save money on the app manually.
You can also ask other thirds parties for similar options or relevant guidance so that your bank doesn’t penalise you for being broke.