Direct debits can be a convenient and hassle-free way to pay your bills, leaving the company you are paying to do all the leg work. Here we answer all your most common direct debit questions...
Direct debits are generally used to pay regular bills from your current account. The amount can be different each payment, but when they are paid is usually fixed.
Direct debits are the preferred method of regular payment for most banks, utility companies and retailers because they give them permission to take the exact amount you owe them straight from your bank account.
Nothing. Direct debits that are used to pay your bills should always be free.
Many companies give you a discount when you pay by direct debit
You remove the risk of forgetting to pay - so no late payment fees
Hassle free: if you have money in your bank, it will be paid automatically
To set up a direct debit you will need to contact the company or organisation you want to pay - this can be done over the phone, online or by post - and get them to do it for you.
Name and address of your bank
Your bank account number
Your sort code
The name(s) on the bank account
You cannot set up a direct debit by directly contacting your bank or building society yourself.
Regular payments you can set up on your bank account yourself are called standing orders and work slightly differently.
You will need to:
Inform your bank - either by phone, online or written conformation
Inform the company that the direct debit is with.
Remember to check if you will be liable for any cancellation fees before you do this.
Any organisation that wants to collect payment by direct debit will need to sign up for the Direct Debit Guarantee.
This is essentially a vetting process carried out by the banking industry which ensures that any company using direct debits complies to a set of rules including:
Informing you at least 10 working days before any changes to the amount, frequency or date of your Direct Debit are made
Agreeing that you can cancel a direct debit at any time
Offering a full refund if an error is made by the company, bank or building society
You should be provided with a copy of the Direct Debit Guarantee whenever you set up.
Like any payment system, mistakes can happen, leading to missed payments, incorrect amounts being taken or on rare occasion the same direct debit being taken twice.
However, errors of this kind are very rare and most direct debits are collected without issue.
In the rare event that a direct debit is taken twice, or another mistake is made, you are protected by the Direct Debit Guarantee and you should receive a full refund from your bank or building society.
If you move your current account you will be covered by the Current Account Switch Guarantee
The service will take care of moving all your payments going in and out including direct debits and standing orders. For the next 36 months they will arrange for accidental payments to that account to be transferred to your new account.
If anything goes wrong, they will refund you any interest or charges on either your new or old current account.
Paying your bills by Direct Debit can actually make budgeting much easier because you know when the money will be taken.
But remember, if your bill will vary from month to month then so will the amount taken by direct debit, so you will need to make sure you have funds available in your account.
Many people set up a separate bills account specifically for their direct debits, so they know that the money in their spending account is away from their bills.
They usually leave your bank account on the same day each month, unless this falls on a weekend or on a bank holiday where they will be taken the next working day.
A direct debit will never leave your account on a weekend or bank holiday.
There is no need to worry about late payment charges or changing your direct debit date as this will be done automatically.
You just need to make sure you have money in your account to pay the direct debit if it will be taken on a different day.
New bank accounts are launched all the time, so compare all of the best options to make sure you get the right one for your circumstances.