Direct Debits and standing orders

If you’ve ever forgotten to pay a bill, you know the hassle it creates. Direct Debits and standing orders change all that – they make sure your bills are paid automatically. Find out how and when to use them, and how to sort out any problems.

Watch our video - How to make payments using your bank account

The difference between Direct Debits and standing orders

  • Direct Debits give a company permission to take money from your bank account on an agreed date.
  • Standing orders give the bank an instruction to pay an exact amount to another account regularly.

Direct Debits

What is a Direct Debit?

  • You tell your bank or building society to let an organisation take money from your account.
  • The organisation can collect however much you owe them, but they have to tell you in advance (normally ten working days) how much they’ll take, when, and how often.
  • Direct Debits are handy for paying regular bills, such as gas or electricity, especially where the amount regularly changes.

What’s good about them?

  • Save time and effort – no need to worry about remembering to pay a bill.
  • Save money – lots of utility providers (like gas and electricity providers) give you a discount for paying by Direct Debit.
  • The bank will pay any incorrect payments back to you.

Are there any disadvantages?

  • You need to stay in control – you need to keep track of when all your Direct Debits are due to go out of your account and make sure there is enough money to cover the payments.

Who can use them?

  • Anyone with a current account, and in some cases a basic bank account. Some prepaid cards or credit union accounts can also be used, but Post Office card accounts cannot.
  • You usually need to be over 16 or over 18 to use Direct Debits, depending on your account, so check with your bank or building society.

How can you set up a Direct Debit?

  • The organisation collecting the payments will tell you what to do. Usually you fill in a form and send it to them, or set it up online or over the phone. They’ll let your bank know.
  • You can also cancel a Direct Debit at any time by contacting your bank.

Do they cost anything?

What if there’s a problem with a Direct Debit?

  • The Direct Debit Guarantee protects you. If either the bank or the organisation collecting the Direct Debit makes a mistake (such as taking the wrong amount) you can get an immediate refund from your bank.
  • If you have a problem with a Direct Debit, you should contact your bank.

Standing orders

What is a standing order?

  • You tell your bank or building society to make regular payments to a particular bank or building society account.
  • They’re different from Direct Debits – they pay exactly the amount you choose, not the amount you owe to an organisation.
  • You can set them up to keep on paying indefinitely, or to end on a certain date or after a set number of payments.

You’re in full control – you can start or stop them or change the payment amount whenever you want.

What’s good about them?

  • They’re especially useful where you can’t use Direct Debits: often to make regular payments to a person, like a child at university or a landlord, rather than to a company.
  • You can use them to move money between your own accounts: for example, if you want to pay a set amount each month into a savings account.

Who can use them?

  • You can set up Standing Orders from Current accounts and most Basic bank accounts. Some prepaid cards or credit union accounts can also be used for Standing Orders but Post Office card accounts cannot.
  • You usually need to be over 16 or 18 to use standing orders depending on your account, so check with your bank or building society.

How can you set up a standing order?

  • You can complete a standing order form and give it to your bank. You’ll need the account number and sort code of the person you’re paying
  • With some banks and building societies, you can set them up online or over the phone.
  • You can also cancel a standing order at any time, or change the amount, payment date or how often they’re paid.

Do they cost anything?

  • No – banks don’t charge you for setting up standing orders.
  • Watch out for refused payments! Just like with Direct Debits, if you don’t have enough money in your account to cover the standing order your bank can refuse to make the payment and can charge you up to £25. Even if they do make the payment you might go into the red without noticing – which means you’ll have to pay overdraft charges.

How to avoid and sort out problems with standing orders

  • Take care with the details. Double-check the bank account details you give, the amount and the payment date.
  • It’s your responsibility to ensure the payment is for the right amount, for example for a mortgage payment if the interest rates change.
  • If you have a problem with a standing order, contact your bank.

Some organisations prefer you to use Direct Debits, as they can set up the reference from your bill or invoice. If this is incorrect on the standing order payment, the money may be taken from your bank account, but not matched up with your bill.