The direct debit payment is a method of transferring money from one bank account to another. When set up correctly, it can be an easy way for companies to receive payments every month without the hassle of chasing customers for their money. They are also useful if you have many small suppliers or employees whom you prefer not to pay in cash but whom it would be expensive to keep paying by direct credit (for example, if they work in remote areas).
Direct debit allows customers’ bank accounts to be debited automatically when bills are due; these payments will usually be made by the customers’ banks on your behalf. It does require customers or employers who agree to this form of payment before any deductions can take place.
It is very important that the correct information is entered when a direct debit instruction is set up. If everything is correct, then the details of the person who should receive the money and the person who will be paying it are registered with each payment you wish to make.
The process of setting up a direct debit can take time, but by following these simple steps you can do this yourself in just a few minutes:
1) Access your bank’s website and log in using your user name and password.
2) Click on ‘payment services’ or similar at the top of the screen and choose ‘direct debits’.
3) Select either ‘make’ (if you want to set them up for somebody else) or ‘receive’ (if you want to receive payments yourself) and follow the instructions.
4) When you have completed the form, copy it down to save yourself time when setting up future direct debits.
5) Once the instruction has been set up, you should receive a letter confirming your decision (if your bank chooses to send these).
6) You should also receive notification of every payment that is due; this will usually come in the form of an e-mail or text message. You can then check whether everything is correct before authorising the payment.
7) Update any changes in your personal details as soon as possible so your payments are not interrupted.
8) If you have any problems, contact your bank immediately to get them resolved quickly.
Why is it useful?
There are many benefits of having direct debits set up on your account. It means avoiding late payment fees, receiving payments faster, only paying for what you use etc. Some companies offer special discounted services if you agree to have automatic payments taken directly from your bank account rather than by credit card. However, if something unexpected happens in your life, you might not be able to pay for all of the things automatically paid out of your account, so this can be risky.
When is it useful?
Direct debit is most appropriate when your expenses are recurring. These services include but are not limited to: – Internet bills – Electricity bills – Car insurance premiums- Mobile phone bills- Sports club membership fees.
If you cancel the Australia direct debit service providers with your bank after all of these payments have been taken out of your account, they will usually allow you to pay back the money in installments over a period of time. You need to consider how long you can afford this repayment period before making this decision.