How to set up a standing order
What is a standing order?
Standing orders are a way of setting up a regular, fixed payment from your current account.
You can set a payment to be taken at a certain frequency (for example, the 1st of each month; or the 1 March, 1 June, 1 September, 1 December, etc.) for a set amount.
A standing order is normally set up by:
• signing a form given to you by the company or person you are going to pay
• setting up the standing order in branch, over the phone or using online banking.
What is the difference between a standing order and a direct debit?
Only you can change the date or amount being paid on your standing order, whereas with a direct debit it is the other way round, where the company or person you’re paying can dictate the amount.
What if I don’t have enough in my bank account to pay a standing order?
If there isn’t enough money in your account to cover the amount needed for the direct debit payment, your current account may have a buffer zone.
This is basically a small interest-free overdraft that your bank won’t charge you for.
However, if you exceed the amount of the overdraft, your current account provider might reject paying the whole amount – which often means that you incur a fee for unpaid bills.
Also if paying a standing order pushes you into an unauthorised overdraft, you may have to pay additional charges as well.
If you know before the payment date of your standing order that you will not have enough to cover it, you should try to arrange a temporary overdraft with your bank, or speak to the company to see if it possible to change the date of the payment.
If you miss standing orders regularly you should consider changing payment dates or paying by a different method.
How to cancel a standing order
You can cancel a standing order at any time. But remember to let the company or person know that you are cancelling it, as not doing so might mean that you are charged a penalty for non-payment of a bill.
Missing payments can also affect your credit rating as some companies can chase up a bill via legal methods.