Direct Debit

Direct Debit, authorized regular payment (which is often variable) debited to a customer's bank account but made on the instruction of the payee. It is therefore different from a banker's order, whereby a customer instructs his or her bank to make a regular payment of a fixed amount at specific times. Direct debits have become increasingly common. Their advantage is that they ensure that regular but variable bills, such as those for utilities or credit cards, are paid automatically, that is, before the telephone is cut off or interest becomes payable on credit card debts. However, by agreeing to direct debits, bank customers give their creditors access to their bank accounts, thereby losing an element of control over their financial arrangements. For example, a direct debit might be made at a time which results in the account becoming overdrawn, whereas if the payment had been delayed by a day or two there would have been sufficient funds in the account to cover it.