While direct debit payments can make it easier to manage ongoing fees and expenses, it does pay off to look at the pros and cons of this convenience first.
Companies, charities and subscription services often recommend direct debit as a convenient payment method.
It is always a simple process to set up direct debit payments, and after that you never have to manually transfer the money or even think about it (until you look at your debit card statements).
But there are times when using a debit card for recurring payments works against you and your bank balance.
Say, for example, you have come to the end of an expensive week and are just waiting for your pay to come though.
If a direct debit payment is attempted before there is enough money in your account, you could end up with overdrawn fees from your bank and late payment fees from the company.
Direct debit fees can also be confused with fraudulent transactions if they are managed by a third-party, while the convenience of them means you may not pay as much attention to the amount of money being spent on a service.
It’s these kinds of reasons that make it even more important to consider what kind of payment option will be the most convenient and effective for your finances.
Cancelling Direct Debit Payments
All it really takes to set up a direct debit payment is your debit card details and a few minutes of your time. Cancelling direct debits, however, can take a lot longer.
Some companies have a requirement to survey people before they can cancel a payment, while others try to convince you that direct debit is still a good thing for you.
Even once you get past the customer service process, there can be complications. Direct debits are usually managed electronically, so if something goes wrong in the cancellation process you could end up paying for a service that you have already opted out of.
In these situations, it is important to check your debit card statement regularly to make sure no unauthorised transactions occur.
While direct debit can often be a benefit for people with debit cards, it is important to understand exactly how they work before giving out your card details. That way you can stay in control of both your payments and your balance all the time.