Direct debits are great for set-and-forget payments but what happens when you forget to stop the payments long after you have any need for them?
Typically, Aussies love the convenience direct debit payments afford. However, just as you'd scrutinise your credit card statements, you should also pay close attention to your direct debits.
Millions of direct debits every day
While it makes sense to set up a direct debit for recurring payments to save yourself time and money, it can be all too easy to forget about their very existence – well beyond your obligations to keep giving your hard-earned cash to the payee in question.
According to the Australian Payments Clearing Association, an average 2.4 million direct debits were made every day during 2013, creeping up to 2.6 million per day for the 2014 year thus far.
Aussies may have a love affair with credit cards, but it seems that direct debits have leading roles in our monthly bank statements.
Australians are big fans of direct debit
A 2013 report from the International Bank for International Settlements analysed figures from central banks from around the globe that are privy to the Committee on Payment and Settlement Systems (CPSS). These included the Reserve Bank of Australia, the European Central Bank, the Hong Kong Monetary Authority, the Swiss National Bank and the Bank of England.
The report, entitled Statistics on payment, clearing and settlement systems in the CPSS countries, showed the volume of direct debit transactions has steadily increased in the five years to 2011.
In 2007, there were 561 million direct debits transactions, rising to 704 million by 2011.
But are direct debits being used appropriately?
Keep an eye on your direct deposits
RateCity CEO, Alex Parsons, said it’s easy to set up direct deposits and just as easy to forget about them.
“Direct debit payments are not only convenient but they are such a popular payment method because you can set it up and then forget about. Most of the time you don’t even notice the money has been withdrawn,” Parsons said.
“In terms of a regular savings method, direct deposits are a great way to set up regular deposits into a high interest savings account but for things such a gym memberships, it’s important to remember to cancel your direct deposits once you have cancelled your membership or you could end up paying for something you don’t need – long into the future.”
You could have direct debits set up for charity payments, gym memberships, power bills, magazine subscriptions, online television services and insurance premiums – so review all these products and services regularly to make sure you really do need them.
Regularly checking bank statements is a straightforward but smart step to ensuring there are no stray outgoing payments.
If you've switched providers for any kind of service, or are no longer receiving a service or product, don't let that direct debit continue to clock on! Jump online, call your bank or even pop into your local branch to cancel direct debit payments that are affecting your hip pocket but aren't giving you anything in return.