How to manage your direct debits and standing orders

How to manage your direct debits and standing orders

Setting up Direct Debits and standing orders on your current account to pay your regular bills and other outgoings is the easiest way to manage your finances. But how do they work?

We have taken a look at the most common questions about standing orders vs direct debits.

What is a Direct Debit?

A Direct Debit is an automatic payment from your account which you set up to ensure your bills are paid on time. It can take the stress out of remembering when your bills are due, all you have to do is ensure there is enough money in your account.

What is a standing order?

A standing order is very similar to a Direct Debit, since it is also an automatic payment. They are set up for regular payments of the same amount each month. If you struggle with your finances and need help with budgeting, an account like thinkmoney might be the ideal solution for you. We keep your bills money separate from the rest of your money to pay your Direct Debits and standing orders.

How do they work?

Since both Direct Debits and standing orders essentially do the same thing, you may be wondering what the difference between them is. The main difference is who they are paying and how they are set up.

  • Direct Debit - These are used to pay companies, often for bills, and the amount can alter each month. You give the company permission to take money from your account.
  • Standing order - These are used to send the same amount of money each month to any UK bank. You instruct your bank to transfer the money to another account. For example, it can be used to transfer your rent to a housemate.

Which one should I use?

If you’re unsure about whether you should use a Direct Debit or a standing order, here are some of the most common uses for each.

Direct Debit:

  • Paying utility bills
  • Mortgage or loan payments
  • Insurance premiums
  • Paying for monthly subscriptions

Standing order:

  • Regular payments to a person you know
  • Regular payments to your savings account
  • Paying your rent
  • Contributing to a charity

How do I use a Direct Debit?

Direct Debits are the ideal way to pay your utility bills, mortgage, subscriptions, and more, therefore, it is advisable to understand how they work. They are very simple to use and as soon as you know how they work, you will know how to use them and set them up for any account you have in the future.

How do I set one up?

Setting up a Direct Debit can only be done through the company you will be paying. You can either set this up online, over the phone, or via post by sending off a form. The information you will need include:

  • Your details, including name and address
  • Your bank’s details, including name and address
  • Your bank account details, including the name on the account, account number, and sort code

How do I cancel?

There are two ways to cancel a Direct Debit; either through the company you are paying or by contacting your bank. By contacting the company, you can cancel and clear any remaining debts or amend any details, including your account details and the date you would like to pay.

By contacting your bank, you will need to make sure you don’t owe anything to the company. You may also still need to pay a cancellation fee.

How do I use a standing order?

Using a standing order is often the same no matter which account you have. They work and are set up the same way. Therefore, once you have set up one standing order, you should understand how to do so for any other account you have.

How do I set on up?

You can set up a standing order through your bank, either online, over the phone, via post, or in the branch. The details you will need to provide include:

  • The amount you will be paying
  • Details of the account you will be paying into, including account number, sort code, and account name
  • The start date and how often the payment will be made

How do I cancel?

Cancelling or amending a standing order is simple. You can do so by contacting your bank or log in to your online banking or app.

How many direct debits/standing orders can I have?

You can set up as many Direct Debits and standing orders as you need. There is no set amount. However, if you are switching your account, sometimes your new provider can require a minimum amount of Direct Debits to be switched over.

How can I see them?

You can view all your Direct Debits and standing orders through your account. The easiest way to do so is via online banking or a mobile banking app. This allows you to see and manage your account anytime, anywhere.

You can also contact your bank by phone or visit them in branch to discuss your account.