What is a Direct Debit?

Direct Debits are a convenient way to automate your bill payments and other recurring transactions. It helps you to manage your finances without having to make a manual payment every month, and you also don’t have to worry about forgetting to pay on time.

Direct Debits are mostly used for regular payments like:

A Direct Debit can also be known as an autopay, automatic transfer, or authorised withdrawal. If you use your credit card for a Direct Debit, it’s known as a recurring card payment.

When you set up a Direct Debit, you agree to terms, such as the payment date, payment schedule (i.e. monthly), and billing amount. This gives the company permission to automatically deduct an agreed or variable amount from your account and credit card on the chosen date. 

Payments are usually made on working days. If the debit falls on a weekend or public holiday, it will normally go on the next available working day instead.

It’s your responsibility to make sure you have available funds in your chosen account at least one working day before the payment is due.  Companies sometimes remind you of your Direct Debit before collecting the money.

Sometimes a billing company will use a different name or a third party to process their payments. You may spot an unfamiliar name on your account statement. If you're unsure, contact the billing company or your bank. 

Learn more: Money transfers

While Direct Debits and standing orders can both be set up for recurring payments, there are some differences.

A standing order is set up by an account holder and involves a fixed amount and date. It can be used for predictable regular payments, like rent, transferring money to your savings, or payments to friends and family.

Explore: What is a standing order?

The company or organisation you’ll be paying will normally set up the Direct Debit on your behalf. They’ll ask you to provide information such as your:

You’ll be asked to fill in a physical or online form, giving them permission to take the money from your account on the agreed date. It may also be possible to give this authorisation over the phone or through the company or organisation's mobile app.

It’s also possible to set up a Direct Debit through HSBC online banking. Log in, select Pay & Transfer, then autopay, and follow the instructions. You’ll need a bill reference number or debtor reference to proceed.

Once you’ve set it up, you should receive a notification from the company or organisation.

Learn more: Ways to bank

This usually depends on the company or organisation and the bank. The process can take a few business days or longer. 

It helps to find out how long it'll take as you may have to make a manual payment while you’re waiting for the Direct Debit to be set up.

For Direct Debits set up through a company or organisation, you’ll need to inform them of your change request (i.e. cancel, change the payment amount, date or frequency) so that they can amend it on their side. 

For Direct Debits set up on your online banking, you’ll need to submit the change request via online banking.

Remember you’ll need to do this well in advance, or at least 4 working days before your next payment is due, to make sure it’s processed in time.

Make sure to check the payments have ended or been amended after you’ve made the changes.

Pros

Cons