What is a direct debit

When you arrange a direct debit, you are essentially giving someone else permission to take funds directly from your bank account.

A direct debit authority is your instruction to your bank to accept debits from your account by another person or business (known as the direct debit initiator).

This is different from automatic payments.

An automatic payment is an instruction to your bank to make a regular payment of a fixed amount from your account to someone else, either for a fixed period of time or indefinitely. A direct debit allows the initiator to submit the specific amount to be debited from your account -- so the amount can vary each time.

You can cancel a direct debit authority at any time through your bank and your right to do so is usually set out on the direct debit authority form.

The bank must act on your instruction to cancel a direct debit authority.

However to ensure payment instructions to your bank cease, you must also contact the initiator to arrange this. If you cancel a direct debit authority with the initiator whose services you are still using it will still expect payment by some other means for the agreed supply of its service.

For more information ring the Banking Ombudsman Scheme office freephone 0800 805 950 or for free and confidential advice and information on this or any other matter visit the Palmerston North Citizens Advice Bureau in Community House, 77 King Street, Palmerston North.

We are open Monday to Friday from 9am-4.30pm. Call us on (06) 357-0647 or 0800 367 222.

We have a free legal advice service by qualified lawyers most Thursday evenings at 7.30pm, and a JP is available on Tuesdays from 12.30pm-3pm. No appointment is necessary for either of these services.