Direct Debit

(The weekly series - Pocket Money - where I explain financial basics in fewer than 200 words. Feel free to make suggestions!)

This is an automated payment method whereby you authorise a company to take money directly from your bank account on agreed dates. It’s used most often for recurring bills like gas and electricity, phones, subscriptions and loan payments.

The amount can vary each time and it’s the company which controls when and how much they take (within the parameters of your agreement). 

They are covered by the Direct Debit Guarantee Scheme which means you get refunded if incorrect amounts are taken, which is enforced by each bank and building society which allows Direct Debits. 

This is different from a standing order where you control the amount and timing of the payment.

Love Eleanor. xxx