A Direct Debit is a regular payment debited from your account that you have previously authorised. The transaction is ‘pulled’ from your account by the company that provided you with a service, but only because you know in advance the amount you will be debited and the date the payment will happen. Direct Debits are typically used to make regular payments for life, car and home insurance, council tax, utility bills and subscriptions. 


What would I use this for?

  • Direct Debits are typically used to make payments for regular financial commitments, such as mortgage payments and mobile phone bills. Businesses like Direct Debits as they have more certainty about when they get their money and it makes their administration more efficient. As a result customers willing to pay by Direct Debit can often find cheaper deals, particularly for their energy supply.
  • You can also set up a Direct Debit to pay your credit card each month – either the full balance, a set amount or the minimum amount required by your credit card company. In addition, you can use a Direct Debit to pay less frequent bills, such as annual insurance premium.
  • You can sign up to a Direct Debit agreement over the phone or online. In those cases, the company you have agreed to pay must provide you with evidence of your agreement for your records.


How do I use it?

  • You will need to have a bank or building society account capable of making Direct Debit payments; most accounts have this option.
  • The company you are paying will need to have an arrangement with their own bank that allows them to collect payments by Direct Debit and ensures they have been rigorously checked.
  • You will need to supply the company you are paying with your account details, including name of bank, sort code and account number. They will either take this information over the phone, online or by using an instruction that you sign and return to them. This will set out the terms of what you are agreeing including the date and frequency of payment.
  • The company will then send this information on to your bank either electronically or by paper and your bank will then set up the Direct Debit for you.



  • You will always be given notice of the amount to be taken from your account and when. The Direct Debit Guarantee stands behind all Direct Debit payments and ensures that if any mistake is made, your bank will refund you immediately.
  • Full details can be found on the Bacs website.


Useful information

  • Direct Debits are made using Bacs. Bacs processes large volumes of financial transactions electronically, including salary payments. You are debited at the same time as the company you are paying receives the money, and on the agreed date.
  • If the payment date falls on a weekend, or a Bank Holiday, the payment is made on the following working day.

Bacs is the central payment system used to process several different types of electronic payment.