<Guides
  • >
  • Current Accounts>
  • Guides>
  • What are direct debits and standing orders?

What are direct debits and standing orders?

Dan Base photo
Written by Dan Base, Financial Content Writer

16 June 2020

They are automatic payments from your bank account. They can stop you missing a payment and take away the hassle of paying manually. Here is how they work and when you can use them.

older-man-on-phone-looking-at-credit-card

How they work

They both let you set up an automatic payment from your bank account to another account. The payment goes out regularly, usually once a month.

The difference is:

  • Direct debits are used to pay companies, usually for bills. They give the company permission to take whatever amount they need each time.

  • Standing orders are used to send money to any UK bank account. They are for the same amount each time, and you control them yourself through your bank.

Both help you to avoid missing payments because they come out of your account automatically. You just need to make sure there is enough money in your account to cover the amount each time.

What if there is not enough money in your account?

This depends on your bank. They could refuse to send the money and charge you a fee. If the payment is for a bill, you may also have to pay a fee to the company you owe money to. Alternatively, the payment could go ahead but put you in your overdraft, which could also come with a fee from your bank.

Who can use direct debits and standing orders?

You usually have to be older than 16 or 18 to use them. You can send both types of payment from:

  • Any current account

  • Most basic bank accounts

  • Some prepaid cards

  • Some credit union accounts

Which should you use?

Standing orders let you control the payment yourself through your bank, but direct debits are useful for paying bills because the company can take the exact amount they need.

Here are some of the ways you can use each payment type:

Direct debitStanding order
Paying utility billsRegular payments to a person you know
Mortgage or loan paymentsRegular payments to your savings account
Insurance premiumsPaying your rent
Paying for subscriptions like SpotifyContributing to a charity

How to use direct debits

You can set direct debits up to automatically pay bills straight from your bank account.

They come out of your account regularly, usually once a month, and the amount can change each time.

You can pay bills from businesses like:

  • Your mortgage lender

  • Your utility suppliers

  • A company you have a subscription with, e.g. a gym or music streaming service

The amount needed is taken from your account directly by the business, which means you do not control the amount paid. However, they must tell you how much they will take in advance, usually with a bill, email or online statement.

Some companies like utility providers charge you less if you pay by direct debit.

However, paying for insurance premiums or large purchases usually costs less if you pay for them upfront. This is because companies charge you a higher price if you spread the cost over several months or more with a direct debit.

How to set up a direct debit

You can only set up a direct debit through the company you need to pay. You can do this online, by phone, by post or by filling out a form in person to confirm:

Your nameYour bank account number
Your addressYour sort code
Your bank's name and addressThe name on your bank account

How to cancel or amend a direct debit

You can contact the company you pay to cancel a direct debit or change details, like the date they take the money.

You could also cancel it by contacting your bank, but the company could charge you a cancellation fee.

What is the Direct Debit Guarantee?

It protects your money when you use direct debits. Every company that offers them has to sign up to the Direct Debit Guarantee. This offers the following protection:

  • You can cancel a direct debit whenever you need to

  • You get at least ten days' notice before any changes to the amount, frequency or date of your payment

  • A full immediate refund if your bank or the company you pay make an error

When you set up a new payment you should be given a copy of the Direct Debit Guarantee.

How to use standing orders

You can set up a standing order to send the same amount of money to another account in the UK on a regular date.

For example, you could send £100 on the first day of every month to your savings account.

You can use them to pay an account in the name of:

  • Yourself

  • Another person like a relative or your landlord

  • A business or charity

The amount stays the same unless you change it, and they can last until a date of your choice or until you cancel it.

The funds usually arrive on the same day because they are sent through the bank's faster payments service, which is also used if you make a bank transfer online.

How to set up a standing order

You can set up standing orders yourself through your bank either:

You need to provide the following details:

The amountThe destination account number
The start dateThe destination sort code
How often the payment is madeThe destination account name

How to cancel or amend a standing order

Contact your bank or log in to your online banking if you need to cancel a standing order or amend its:

  • Amount

  • Date

  • Frequency

How to transfer them to a new bank account

If you switch to a new current account with another bank, your direct debits and standing orders will be automatically moved over to your new account.

This means all your payments can continue from your new account without you needing to change them yourself.

Direct debit and standing order FAQs

No, it is free to set them up on your account. However, there are fees if a payment fails because there is not enough money in your account.

Logging into your online banking is the quickest way to check them, but your bank can also confirm them by phone or in writing.

Banks do not usually limit the number you can have. You just need to make sure there is enough money in your account to cover them all.

Yes, the wrong amount could be sent or it could be sent twice, but this is very rare. Your bank must refund you, so make sure you report it to them.

If you cancel a direct debit, you can claim the money back if the company still takes it. However, if you owe them money you will still have to pay them.

No, they leave on the specified day, e.g. the 1st of each month, except weekends or bank holidays when it leaves on the next working day instead.

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.

Compare current accounts

You may also like

  • How does online banking work?
  • How business current accounts work
  • How to pay with contactless and Paym
  • How to manage your bank account
  • What are current accounts?