To benefit from some of the switching incentives and rewards on offer with many current accounts, you’ll often need to set up a number of direct debits.
A direct debit is any payment that goes out of your bank account to pay for a bill or subscription, for example. It gives a business the authority to take money from your bank account when the payment is due, and to set one up, you must complete a Direct Debit Mandate form online or on paper.
It’s important to note that a direct debit is different to recurring a payment, which is also known as a Continuous Payment Authority (CPA). Rather than being pulled from a bank account, recurring payments are charged to a debit card or credit card until this arrangement is cancelled – this must be done directly with the organisation.
Recurring payments are often used for subscription services or to pay for high value goods or foreign currency. They often offer next day clearance, whereas direct debits can take a few days to clear. Although they are still regular payments, they are not the same as direct debits and therefore cannot be used to qualify for current account switching incentives and rewards.
You should also be aware that banks will often specify in the small print that any direct debits on the account must be “active” to qualify for switching incentives. In other words, the direct debit(s) needs to go out each month. So if you have a direct debit that goes out quarterly or annually, it probably won’t count.
Below is a list of some of the direct debits you can set up on your bank account to help you earn those switching rewards:
This is the core group of direct debits and includes your:
If you regularly donate to charity, check whether you’re doing this via direct debit. If you’re not – perhaps you’re doing it via payroll giving instead – you could consider switching to a direct debit payment to help you qualify for a current account.
If you need more direct debits, depending on the benefits you’ll get from your chosen account, you could consider setting up further charity direct debits. You can usually do this for relatively small monthly amounts but consider whether it’s worth it first.
In some cases, you can also set up direct debits to send money to your savings account. This can be a great way of qualifying for a new current account without having to pay for another service. However, you’ll need to do your research as not all savings accounts will accept direct debit payments.
If you use PayPal to make a purchase, you’ll usually find that the money is taken from your current account via direct debit. This gives you another option, but keep in mind that it’s unlikely to be regular enough to qualify in many cases. A way round it is to use PayPal to pay for a regular service that doesn’t allow direct debits, such as Spotify.
If you regularly use a credit card, setting up a monthly direct debit will not only ensure you pay your bill on time, it could also count as one of your direct debits on your new current account. You’ll need to make sure this payment is for at least the minimum monthly amount, but ideally set it to pay off the full balance each month.
Setting up direct debits from your bank account should be relatively straightforward. Hopefully we’ve outlined a few different options for you to try so that you can make the most of those current account switching incentives and rewards.
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