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Direct debit payments offer convenience, savings, and easy payment tracking, but potential drawbacks include losing control of the process and difficulty in making changes. It’s important to track payments and consider a manual approach for more control.
Paying with direct debit is a common strategy today. Banks and other institutions make it easy to set up this type of payment option for a number of debt obligations, including utilities, monthly insurance premiums, and monthly mortgage payments. While very convenient, it’s important to note that there are some potential drawbacks to this approach that can make using a direct debit approach for some invoices a little less attractive. Among these is the potential of forgetting to deduct the amount from the check register and losing control of the bill payment process.
When it comes to the advantages of paying with direct debit, convenience is always at the top of the list. The ability to set up recurring payments as direct debit transactions means there’s no need to spend time writing checks and swiping them through the mail. There’s also no need to worry about missing an invoice and then being charged late fees due to a late payment.
Another benefit of paying with direct debit is saving a bit of money. Since there’s no need to mail checks, there’s no postage and no need to buy envelopes. Some companies even offer customers small discounts if they agree to set up a recurring electronic payment, which helps save even a little more money.
Paying with direct debit also makes it easy to track payment histories. Typically, the account holder can log into their account and easily get a list of when each automatic payment was made. This makes it easy to verify what payments have been issued and when those issues were made, a benefit that can be useful if some sort of dispute arises with a provider.
While there are a number of advantages to paying by direct debit, consumers should be aware of a couple of potential pitfalls. One has to do with losing control of the process. While the need to write checks is eliminated, that doesn’t mean direct debit payments don’t need to be tracked. Otherwise, you could leave a checking account in disarray. Also, making changes to direct debit payments can be cumbersome. For example, if pay dates must be changed for some reason, such as a late deposit of a paycheck, the time and effort required to do so can sometimes be significant. For this reason, some consumers prefer to use a manually controlled format to send electronic payments rather than an automated approach.
Smart Asset.
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