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Standing Order or Direct Debit – What’s the difference

What is the Problem?

What is the difference between a Standing Order and a Direct Debit?

While this may seem like a very simple question, it is still a very important one.
It seems weird saying this, but never trust bank staff to be able to explain banking products, services and or processes correctly, because in this modern age, bank staff are often the least informed people when it comes down to banking code and banking practice. And that’s coming from an ex-banker! In the program we go over the important differences. Not knowing which is best will cost you your cash. And we don’t want that do we!

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About the Presenters

Simon Goldberg

Simon, began his working life with Messrs. Coutts & Co, bankers to the Queen. During a career which has, thus far, spanned 29 years, Simon has served time as a Bank Manager, Financial Adviser, and General Manager of a major UK Broking Firm, which later became London Scottish Broking. A Certified Mortgage Specialist, Simon set up his own broking firms in late 2002... Find out more about Simon

Your hosts - Mark Moxom and Alain Braux

Mark Moxom

Mark is a multiple best selling author on food, health and business. He has had decades of experience in natural health and is an outspoken advocate of natural nutrition and drug free living. He's also the founder and executive editor of Low Carb Mag. More about Mark

The Rest of The Story

You and your Cash Help Sheet

Click image for help sheet as a PDF

Your Due Diligence

It seems weird saying this, but never trust bank staff to be able to explain banking products, services and or processes correctly, because in this modern age, bank staff are often the least informed people when it comes down to banking code and banking practice. And that’s coming from an ex-banker!

The Outline Solution

A Standing Order:

  • is an instruction from you to your bank to pay (typically) a regular amount for a set period of time, or until further notice. You are known as the payer, and you send the money to the payee.
  • These can be weekly, monthly or at other regular intervals and YOU are in full control.
  • If the day or the order falls at a weekend, the standing order should leave your account the next available working day.

You create the instruction/order.

As opposed to

A Direct Debit:

  • This is an authority, handed to your bank, authorising them to accept third party dipping into your account: usually for a specified amount, on or around a specified date.
  • Because of the obvious ability for a third party to abuse such an authority, the direct debit comes with a guarantee that you can claw back incorrect deductions (subject to certain conditions)

Possible Arguments Against You

Standing Order

The Standing Order provides You with the greatest level of “hands on control”, ignoring errors or mistakes by bank staff when setting it up; but this also places responsibility on you to get the account numbers, amounts and timings correct.

Direct Debit

The Direct Debit, is less secure, less reliable, and provides you with less control.

The Almost Legal Info

Standing Order

  • You have very few excuses for making mistakes yourself, though any third party receiving too much should hold those funds, in trust, to your order; especially where they haven’t earned them, and or were not reasonably expecting them.

Direct Debit

  • Offers a “Guarantee” that you can claw back payments in certain circumstances (for example; where an ‘error’ has occurred)
  • There is a growing trend for bank staff to obstruct direct debit claw backs, under the Direct Debit Guarantee, which in itself may contradict the whole idea of a ‘guarantee’.

 

Helpful Info:

  • Standing Orders can be used to reduce the term of your mortgage: to find out more why not watch the following YAYC show:
    ‘Can I Reduce the Interest I Pay on My Mortgage?’ (In production)
    If You don’t like the idea of automated payments, you can always pay by cheque, though some companies may charge you for paying in this way, and many will not accept cash.

 

Need More Help?

If you want to find out more about the Direct Debits, watch the video at… http://youandyourcash.com/standing-order-or-direct-debit-whats-the-difference/#more-help

 

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