Updated: Sep 19
When it comes to managing your finances, it's important to understand the different payment options available to you. Two commonly used options are direct debits and standing orders, but they are not the same thing. In this blog post, we will take a closer look at what each one is, how they work, and the differences between them.
Learn more by watching the video and reading the blog post below:
A direct debit is an arrangement you make with a company or organisation to allow them to take money directly from your bank account on a regular basis. This could be for things like bills, subscriptions, or regular payments. You provide your bank details to the company, and they will take the money directly from your account on the agreed date. Direct debits are convenient because they save you the hassle of manually paying bills every month. They also help ensure you never miss a payment.
A standing order is a payment instruction you give to your bank to make regular payments to a specified recipient. Unlike direct debits, standing orders are set up by the account holder and not the recipient of the payment. This means you have full control over the payment amount, frequency, and duration. You also could cancel or change a standing order at any time. Standing orders are useful for paying rent, mortgage payments, or other regular expenses.
Control: With direct debits, the recipient of the payment has control over the payment amount and frequency, while with standing orders, the account holder has full control.
Security: Direct debits are considered to be more secure because they are protected by the Direct Debit Guarantee, which means you are entitled to a full and immediate refund if a payment is taken in error.
Flexibility: Standing orders offer more flexibility than direct debits, as you can change or cancel them at any time. Direct debits can only be changed with the agreement of the recipient of the payment.
Automatic Payments: Direct debits are automatically taken from your account, while standing orders require manual intervention from the account holder.
In conclusion, both direct debits and standing orders have their own advantages and disadvantages. The best option for you will depend on your individual needs and financial situation. If you need regular payments to be made automatically, a direct debit might be the better choice. However, if you want more control over the payment amount, frequency, and duration, a standing order might be the better option. Before deciding, it's important to consider your financial situation and speak to your bank if you have any questions.