Standing Order verses Direct Debit

Diggla

I wanted to pay an organization with a standing order however they would prefer for me to set up a direct debit as they the administration cost to them are lower as it is automated. Does this mean that standing orders are not automated ?
Can anyone spread some light on to why this is.

PlutoinCapricorn

Many people are confused about this. Both are ways of making automated payments, usually at regular intervals.

The main difference is that Standing Orders are completely under your control, whereas Direct Debits can be changed from the receiving end.

You are the only person who can change the amount, frequency and pay date for your Standing Orders, or cancel them. The money is sent by your bank.

With Direct Debits, the other end can increase the amount themselves provided that they give you notice of this. This is why utility companies prefer DDs as the amount can fluctuate according to your usage. The beneficiaries draw or suck out the amounts from your bank account. This is more convenient for the receiving company.

david39

Unless they offer you some incentive to change to a DD (or completely refuse to accept payment by SO) then, provided you are happy with whatever the organisation is providing, do not agree to the change.

It is always better that you are in charge of the payments coming out of your account than the recipient being in control.

PlutoinCapricorn

I agree that SOs are safer in general than DDs.

'Paperless direct debits' have caused problems for people who gave their bank details to get a free trial of something without realising that they had committed themselves to paying via a DD unless they cancelled something. They only realised this when the money was taken from their bank account. This could not happen with Standing Orders.

However, I do get an incentive to pay my electricity bill via DDs, and it would be a pain to have to change the amount from my end from time to time.

I also DDs to pay council tax and my water bill by installments: the amounts are fixed in advance of the year, and this saves me having to change the amounts myself.

zx2011

If the amount is variable or going to change then Direct Debit are easier. They are also covered by the Direct Debit Guarantee which comes with several rights

pinkdalek

PlutoinCapricorn wrote: »

I agree that SOs are safer in general than DDs.

.

Try claiming money back when a payment has been sent in error by standing order.

With direct debits you have the direct debit guarantee should the originator fail to notify you of a change in date/amount/frequency and the bank refunds you.

Standing orders you are control of when the money leaves your account, but remember you are also in control of administering it correctly eg amending amounts etc.

Gromitt

Claiming money back might be a pain, but last time I forgot to change a SO and paid a company too much money, they just put the extra as a credit on the next bill. So no big deal.

Diggla

Thanks to everyone for the information and advice.
I do prefer using standing orders where I can as I feel in the age of online banking more in control of my money.
I have to think the banks also prefer direct debits as I found out whilst changing my current account. The banks would have you believe it's easy but I had problems with direct debits not being set up correctly, one of which resulted in a late payment charge (however this was later refunded). Also at the time one organization informed it would take 4 - 6 weeks to set up the direct debit, I asked them for their account details and set up a standing order in five minutes !
The only time I find direct debits useful is if my bill varies eg. telephone, however, I get a bit annoyed with my electricity supplier as they seem to set the monthly payment to their liking and I usually end up hundreds of pounds in credit.
I think I'll stick to standing orders where I can.