What Counts as a Direct Debit?
First, What is a Direct Debit?
A Direct Debit (DD) is an instruction by you, to your bank/building society which authorises the organisation you want to pay to collect an amount from your account. Money is automatically deducted from your account but any alterations to the amount/date collected has to be authorised by you in advance of the collection date.
This allows you to pay regular bills/amounts to a number of organisations. (This differs from a standing order, an instruction by you to your bank to pay out a regular set amount to another account).
When Do I Need Direct Debits?
When you open a bank/building society account, you may be required to have a minimum number of direct debit payments set up or transferred from another account if you switch bank.
Thankfully, there are a number of easy ways to meet minimum direct debit requirements: (Hint: There is no minimum amount required per DD)
Find out what direct debits you have
First, I would ask that you look at all your existing DDs. You can contact your bank/building society and check or you can find this if you login online. Count how many you have and ask yourself three things:
- Do I still require these outgoing payments (eg. unused gym memberships)
- If yes to some/all, do you require all to come from that account?
- If no, shift some over to meet minimum requirements of a new account
Direct Debit Examples:
- Credit Card (I recommend paying off the full monthly balance with DD)
- PayPal (£1 to your PayPal account > Withdraw immediately after DD deposit)
- Some savings accounts (Regular DD to your savings)
- Investment accounts
- Charity (you will profit from gaining access to a bank account by giving)
- Mobile phone contract
- Some online subscriptions
- Household Bills
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