My bruises have bruises. I'm blaming the cheerleading. Review writing is a whole lot less dangerous....
My bruises have bruises. I'm blaming the cheerleading. Review writing is a whole lot less dangerous.
Member since:08.07.2001
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A large part of my last job in the UK involved sorting out the troubles customers got themselves into when they “forgot” to pay their store card bills, and at least 5 times a shift I could be heard to mutter the immortal words “Well why don’t you set up a Direct Debit?” I’ve got a few of the lovely DD things – one for my rent, another for my credit card and a third for my staff card, but just what are they?
Direct Debit is a simple and safe method of paying bills and subscriptions automatically from your current account. You and the company in question agree the amount to be collected and the date on which this will happen, and then you sit back and relax. From then on the amount will be deducted from your account on a regular basis. The company can only take up to the agreed amount (as stated on your latest statement / bill) - if they need to change this or the date of collection, they have to let you know first.
2. How do I set up a Direct Debit?
There are 2 main methods: you can either
(a) complete a Direct Debit Instruction, obtained from the organisation you wish to pay, and return it to them
or
(b) set up
Direct Debits over the telephone or via the Internet. The organisation in question will then forward your instructions onto your Bank authorising them to make payments from your account to them.
3. What information do I need to set up a Direct Debit?
Name and address of your Bank or Building Society – and believe it or not, “HSBC, Manchester” might not be sufficient – there’s more than one you know
The name(s) of the account holder(s)
Your Bank or Building Society sort code and account number – to be found on your statement, cheque book or cash card.
4. Can Direct Debits be paid from any account?
Nope, although most current accounts are fine. Check with your bank first if you are unsure, because if it doesn’t go through due to an error on your part, you may be liable for fines and/or interest charges. The usual ones you can’t use are savings accounts because they are just that – for saving. As a general rule if you have direct card and cheque access to an account, you can set up a DD from it.
5. If I set up a Direct Debit over the telephone or via the Internet what record will I have of the agreement?
Assuming they’re a reasonably reliable firm, they’ll send you a letter confirming the details, with a number to ring if anything is incorrect. If you don’t hear from them after a while, ring them up and scream, sorry, ask nicely for one.
6. Can I cancel a Direct Debit?
Yes, at any time, by contacting your bank AND the company in question. Remember, as soon as your DD stops, you’ll need to make alternative arrangements for paying the bill, and if you stop it AFTER you get a statement but BEFORE the payment date, that payment might not go through.
7. What is the Direct Debit Guarantee?
The official website (directdebit.co.uk) claims “All Banks and Building Societies that take part in the Direct Debit Scheme offer the Guarantee. The efficiency and security of the Scheme is monitored and protected by your own Bank or Building Society. If the amounts to be paid or the payment dates change, the company will notify you normally 14 days in advance of your account being debited or as otherwise agreed. If an error is made by the company or your Bank or Building Society, you are guaranteed a full and immediate refund from your branch of the amount paid. You can cancel a Direct Debit at any time by writing to your Bank or Building Society. Please also send a copy of your letter to the company.”
~~ Extra Info ~~
In 2000, over 2 billion Direct Debits were processed by the high street Banks and major Building Societies. 75% of people currently use Direct Debits for paying regular bills. This is the most popular method compared to cheques (45%), cash (35%), credit cards (14%) and debit cards (18%). If nothing else, this indicates that the majority of people in the UK are confident that this method is safe, easy and useful. Not to say 25% don’t like it though – there are still many people in the UK who don’t have bank accounts, and without one DDs cannot be set up.
The Direct Debit Scheme offers a money back guarantee which means that the customer's Bank or Building Society must give an immediate refund, in the unlikely event that either an incorrect amount is collected or an amount is collected in advance of the agreed date.
~~ Conclusion ~~
To DD or not to DD?
+ simple – set it up and you will never miss a payment again
+ handy if you travel a lot, and so aren’t at home when bills arrive. I still use my UK Mastercard here and when traveling and know it will be paid off on time each month, even though I'm spending this year miles from by bank.
+ they are generally taken out of your account on the last day in an interest free etc period, giving you your money for longer – if you pay online for example you often need to send the payment through a few days in advance.
+ free to set up, and saves you possible interest charges and fines, plus blocked accounts for unpaid bills
+ can be cancelled at any time if you find the system is not working for you
+ different types to suit you and the company - you can pay a fixed amount (like with a standing order) or a variable amount (such as the full balance) each month, and also change this whenever you want.
+ There are sometimes discounts to be had by choosing this method, because it makes the company happy knowing they don’t have to rely on you to send them some money – it’ll be done automatically
- it’s easy to lose track of how much you spend if you don’t have to write the cheque out each month
- mistakes can happen and although you’ll get your money back, they can sometimes take a while to sort.
- the DD can only be paid if the FULL amount is in your account
– if not it will be returned and you’ll be charged a fee by the bank, plus have problems with the company you were supposed to have paid.
I’ve never had a problem with a DD being returned, not collected properly or anything else, and I’ve been using them since I turned 18 to pay both internal (i.e. paying off an HSBC credit card using an HSBC account) and externally (paying my staff store card, paying my rent – DD not standard order because the amount varies from month to month).
At the end of the day, it’s your life and your money, but in my case at least, DDs have proved pretty useful.
** Ignore some of the questions below - this is a payment sevice, but a few of these don't apply
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A very well presented piece of info for the DD system,
Just a few notes for your reference, the direct debit system does not cover standing orders in the same way, as they are agreements set up between the customer and the bank direct,
Also some banks actually charge customers for cancelling Standing orders & direct debits, but not many.
cheers
charliebuoy
Soho_Black 25.01.2003 00:32
The only problem I can see with DD, is the one I'm having with TeleWest right now - sure, it's convenient, but they're not good at getting my bills to me, and I like knowing what will be leaving my account before it does.
Advantages: Quick and simple to set up; Never get into arrears with bill payments Disadvantages: Might be difficult to budget for if you are not paid monthly
Advantages: Quick and simple to set up; Never get into arrears with bill payments Disadvantages: Might be difficult to budget for if you are not paid monthly
very helpful by (100%):
