How do I Choose the Best Direct Debit Service?

D. Nelson
D. Nelson
Businessman with a briefcase
Businessman with a briefcase

A direct debit is a service that allows you to give authorization to another party to withdraw money from your account. The money is normally withdrawn from a consumer's checking account and is most often used to pay for a service. For example, instead of writing a check to a utility service, you might choose instead to authorize a direct debit payment, and the utility service would take a specified amount from a designated account. In order to choose the best direct debit service, it can first be important to make sure that the service is legitimate and secure. It can also be helpful to consider how much control you have over the direct debits and to make sure that the terms and agreements are clear.

Usually, a direct debit service is offered by a company from who you are purchasing goods and services. While some direct debits may require you to first inform the bank of a transaction, in most cases, this step is not necessary and you need only supply necessary account information to the service to whom you owe payment. For this reason, it is necessary that you trust the company whom you are allowing to perform the direct debit service. Before giving account information to businesses with which you are unfamiliar and strange charities and other organizations, it can be useful to do a little research to ensure the legitimacy of an organization.

The degree of control you desire to have over your direct debit service is another factor to consider when it comes to choosing the best. Sometimes these services may be recurring, meaning that the withdraw occurs at the same time each month, week, or year. Other services may require you to authorize each withdraw before it can be made. Being able to choose the amount of money withdrawn from an account is another factor that many consumers look for when choosing the best direct debit service.

To find the best direct debit service it can also be helpful to understand various terms and conditions associated with a contract. Most companies will present customers with contracts that they must sign off on prior to utilizing a direct debit. If you are adamant that a company can only withdraw from your account when you approve of the transaction, you should make sure that there is no print that allows for exceptions. A withdraw from your account when you are not expecting it can lead to negative balances and overdraft fees.

There are cases when a direct debit is mistakenly performed. In these cases the company that performed the withdraw may in some locations be responsible for refunding the money. In other instances, the bank may be required to replace the mistakenly withdrawn money. Courses of action depend on factors such as legislature and policies of a financial institution.

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      Businessman with a briefcase