Should I use a direct debit or standing order for regular payments?

If you're looking to make a regular payment from your bank account, read our guide to the differences between a standing order and a direct debit and when to use them.

Standing orders

A standing order is an instruction you give to your bank or building society to authorise a payment for a set amount, usually on a regular basis, to be made to another UK bank or building society account.

On the day specified, your account will be debited and the money transferred to the person or business receiving the money.

Standing payments are typically used to make rent payments, monthly charity donations or if you want to make a regular payment into a savings account.

A standing order amount will remain the same, unless you amend your instruction.

With standing order payments the money is transferred through the Faster Payments Service, and will be processed on the same day.

Standing orders can be simpler than direct debits, mainly because the business is not involved in claiming payments from you. 

At set times, your bank just sends the money into the beneficiary’s bank account and only you can alter the payments. The beneficiary can be anyone.

Top tips

  • Standing orders can be simpler than direct debits, mainly because the business is not involved in claiming payments
  • The main advantage of direct debits is the flexibility
  • Direct debits also give you more consumer protection under the Direct Debit Guarantee
  • The Direct Debit Guarantee says your bank should refund disputed payments without question, pending further investigation

Direct debits

A direct debit is different. With a direct debit, you agree payment terms with a payee - for example, your mortgage provider. 

You then give authority to your bank or building society to debit your account with payments requested by your mortgage provider. You do this by completing a direct debit form or mandate. 

By completing the direct debit form, you instruct your bank to permit your mortgage provider (or any other authorised payee) to draw payments from your account. These payments can vary in amount or frequency.

A direct debit is more likely to be used to make payments that can vary from time to time – such as mortgage instalments or utility bills.

The main advantage of direct debits is the flexibility. The variable nature means that organisations or individuals can claim different amounts at different times.

Its usually better to go for a direct debit as it gives you more consumer protection. 

Find out what you should do if money has been taken from a cancelled direct debit

Direct Debit Guarantee

Usually, you have to sign a direct debit form, although some particularly trusted companies are authorised to set up direct debits over the phone.

If that sounds a little risky, remember that the company must have obtained the bank account details from you and that you are protected by the Direct Debit Guarantee

In order to be an approved company, the beneficiaries of direct debits are subjected to careful vetting procedures and, once approved, they're required to give indemnity guarantees through their banks.

The Direct Debit Guarantee applies to all banks and building societies taking part in the direct debit scheme.

The guarantee states that your bank should refund disputed payments without question, pending further investigation.

It says that: 

  • if there is a change in the amount to be paid on the payment date, the person receiving the payment (the originator) must notify you in advance
  • if the originator or the bank/building society makes an error, then you are guaranteed a full and immediate refund of the amount paid
  • you can cancel a direct debit at any time by contacting your bank or building society. Written confirmation may be required. You should also notify the organisation.

Find out how to cancel your direct debit or standing order in our guide. 

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