By Jim Fay•
A Direct Debit is an easy way to make payments for utilities like gas and electricity. We’ve covered the basics in this guide.
If you pay monthly for a service, like a phone contract or gas and electricity, you’ll have the option to pay by Direct Debit.
Direct Debits are automatic payments, so it’s one less thing to remember each month. And if your bank card expires, your Direct Debit payments will carry on as normal, because a Direct Debit is linked to your bank or building society account, not your card.
Your bank or building society has to authorise a company to take payments from your account. This is called a ‘Direct Debit mandate’. And any company that offers the option to pay by Direct Debit goes through a careful vetting process, so you’re covered by the Direct Debit Guarantee.
If there are any changes to the amount, date or frequency of your Direct Debit, the organisation will notify you (normally 10 working days) in advance of your account being debited or as otherwise agreed. If you request the organisation to collect a payment, confirmation of the amount and date will be given to you at the time of the request
If an error is made in the payment of your Direct Debit, by the organisation or your bank or building society, you are entitled to a full and immediate refund of the amount paid from your bank or building society
If you receive a refund you are not entitled to, you must pay it back when the organisation asks you to
You can cancel a Direct Debit at any time by simply contacting your bank or building society. Written confirmation may be required. Please also notify the organisation.
A standing order is when you ask the bank or building society to pay an exact amount to another account regularly, for example once a week or once a month. If you need to change the payment amount, or how often you pay it, you’ll need to get back in touch with the bank or building society and ask them to change it.
A Direct Debit gives a company permission to take payments from your bank or building society automatically on an agreed date. Unlike a standing order, the company you are paying can increase or decrease the amount of money they take from your account, or change the payment date if they need to. The Direct Debit Guarantee means they can’t make these changes without letting you know first.
If there isn’t enough money in your account to cover your Direct Debit payment, the bank can refuse to make the payment and might charge you. Even if the bank allows the payment, your account might go overdrawn, which could mean you’ll have to pay overdraft charges and fees.