A direct debit is an arrangement between yourself and a company, giving the company the allowance to take a set amount of money from your account on a regular basis i.e. weekly, monthly, yearly etc. This is most commonly used to pay bills, such as gas and electricity, and helps you pay your bills on time, avoiding the late payment fees. If the amount regularly changes, the company must alert you with at least 10 days’ notice of the payment being taken from your account.
What’s the catch?
A direct debit saves time and energy but also requires maintenance in order to avoid those transaction fees. It is up to you to check your account before each direct debit is withdrawn to make sure that you have enough in your account to cover the amount; you can do this through online or telephone banking.
How do I set up a Direct Debit?
The company to whom the money is being paid will help you with this, whether you fill in an online or paper form, or complete the process over the phone. They will also notify your bank of this so that when the agreed date arrives you don’t have to do a thing, and you can cancel a direct debit at any time; just talk to your bank either in person, over the phone or sometimes online.