As we often have so much to pay for, it can be so easy to forget about one or two bills. Unfortunately, this may lead to outstanding debts that will set back a person’s finances or ruin their credit rating. However, direct debit payments might be the perfect solution to keep bills in check and a credit rating high.
What is a Direct Debit?
A direct debit allows a company to withdraw an agreed sum from an account on an agreed date. Therefore, the bill payer won’t have to make a payment into an account, as it will be automatically transferred to an organisation.
Spread the Repayment Costs
Many people opt for a direct debit as it can help spread repayment costs over a longer period of time. The bill payer can, therefore, pay bills in smaller, affordable amounts, in comparison to a large cash lump sum. One benefit of a direct debit is that the money will leave an account on the same date every month, week, etc., so the account holder will know when the payment will be taken.
Every direct debit will come with a Direct Debit Guarantee, which offers protection if a company or bank/building society make a mistake. For example, if they transfer the wrong amount from an account, the account holder will receive an immediate refund. Also, should the direct debit date change, they will receive advance notice to sort their finances. Should they decide they no longer wish to pay a bill by direct debit, they can simply cancel it with the bank.
Peace of Mind
Direct debit payments are regarded as one of the safest payment methods available for three reasons:
- It protects the bank account holder and their money.
- Automatic payments will ensure bills are not forgotten, lost or delayed – so the bill payer won’t incur any late repayment charges or damage to their credit score.
- Every company using the Direct Debit scheme will undergo a strict vetting process, and they are monitored closely by the banking industry.
The account holder can, therefore, trust that their finances will not be abused by an organisation and that bills will be paid on time.
Direct debits are not only convenient for the bank holder, but they benefit businesses too as they won’t have to chase late repayments, etc. For this reason, some companies may offer discounts when a customer pays via direct debit. It, therefore, pays to check any bills to see if there are any savings to be made by switching to direct debit.
While direct debits are a great way of regularly making payments, they can have their disadvantages. If a bill payer decides to pay by direct debit, it is essential they have the appropriate funds in their account, as a bank might not make the payment to the organisation. Not all banks will inform a customer if they’ve missed a payment, which can lead to numerous missed payments that may significantly affect a person’s finances and credit rating.
If you are struggling with debt and would like informative, free advice, we recommend you seek immediate professional help. Don’t suffer in silence. Consider a debt management plan or IVA, or contact a member of our team for further assistance.