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Avoiding direct debit fees

02/11/2022

Payment types that could save you money.

Using direct debits to automate your recurring payments may seem like a convenient option, but could come with a catch and start costing you in fees if you’re not across your financials.

Here are some considerations to make when weighing up a payment option that suits you the best.

Firstly, what is a direct debit?

A direct debit is an automatic transfer of money from your account to another – usually by a service provider to manage bills like your gym membership or bills.

Setting up a direct debit means you give the service provider permission to deduct the amount owing from your nominated account.

While this set-and-forget method has its benefits, it can start costing you in fees if you don’t have sufficient funds in your account on the scheduled direct debit date.

And between subscription services, bills and health or insurance memberships, it can become easy to lose track of direct debits you have set up, catching you out when they occur – or leaving you short if the amount varies between each bill.

You also need to contact the service provider or your bank to cancel a direct debit, which can take some time and you’ll need to check any contractual obligations you have or cancellation fees this might incur.

Other payment options

1. Recurring payments

A recurring payment is similar to a direct debit payment, but instead of linking the payment to your account, using your BSB and account number, you link it to your Visa Debit or Credit card.

Using your card instead of your account means you won’t be charged a direct debit dishonour fee if you don’t have the available funds in your account, but you might want to check if the service provider includes any other charges for this payment method.

Setting up a recurring payment typically follows the same process as setting up a direct debit, except you’ll need to change your debit details to include your card number, expiry date and three digit CVV on the back of your card.

You’ll also need to update your card details with the service provider if it expires or you get a new card as the linked details will be different and could put you behind in your payments.

2. Scheduled payments

Instead of locking yourself into either of the above direct debit arrangements, you may be able to set up your own payments through the app or internet banking and manage them yourself.

Setting up a scheduled payment through BPAY®, Osko® or Pay Anyone gives you total control of the amount and frequency of your transactions and also makes it easier to edit or cancel a payment at any time.

You’ll need to know the due date of your bills and set the payments up yourself, but it can be an easier way of working bills into your budget.

You could even set up regular incremental payments to the service provider if you struggle paying one large lump sum each month or quarter.

How do I set up a scheduled payment?

You can easily set up a new biller using BPAY on your app or internet banking.

The biller details of your service provider should be listed somewhere on your bill.

Simply select the account you want your payment debited from, add the biller details, enter the amount and choose the frequency of how often you’d like to make the payment.

You should then be able to see your upcoming payments listed under your scheduled payments list, where you can easily make edits or changes.

How to avoid paying direct debit fees

If you still prefer to use the direct debit option, there are ways you can help avoid fees:

  • Check your balance regularly by using the app or internet banking
  • Where possible, set up regular deposits into the account direct debits are taken from to give yourself a buffer
  • Check the timing of your direct debits and set them up after your pay day so you have plenty of funds in your account
  • If you have direct debits linked to a card, make sure you update your details with the service provider if you get a new card or your old one is lost/stolen.

This article is intended to provide general information of an educational nature only. Information in this article is current as at the date of publication. ® Registered to BPAY Pty Ltd ABN 69 079 137 518

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