Financial guru Martin Lewis has issued an urgent alert to every person in the UK who holds a bank account, stressing a critical distinction between two common methods for managing regular bills.
The Critical Payment Choice: Direct Debit vs. Card
In a recent discussion, the founder of MoneySavingExpert.com made it clear that consumers should always opt to pay via Direct Debit instead of setting up a recurring payment with their card details. This advice is crucial for anyone covering monthly costs for services like streaming platforms, gym memberships, or software subscriptions.
Lewis explained that when you provide your long card number for a subscription, you are authorising a 'recurring payment'. Each transaction is treated as a separate, individual payment that simply repeats. This setup, however, leaves you with "far fewer rights" compared to the robust safeguards of a Direct Debit.
The Power of the Direct Debit Guarantee
The key advantage lies in the Direct Debit Guarantee, a powerful set of consumer protections that does not apply to card payments. Under this guarantee, if you need to cancel a payment, you only have to contact your bank. The bank is then legally obligated to stop all future charges immediately.
Furthermore, if a Direct Debit is taken in error or for the wrong amount, you have the right to an instant refund from your bank. This refund must be issued before any investigation is concluded, offering significant peace of mind.
The Hassles of Recurring Card Payments
Disputing an incorrect recurring card payment is a different story. The process is not instant and depends on the rules of the card scheme (like Visa or Mastercard), not a statutory guarantee. Outcomes are less certain, and banks often tell customers to contact the payment provider directly to cancel, which can be frustrating.
Another major convenience of Direct Debits surfaces when you switch your current account. Using the Current Account Switch Service ensures all your Direct Debits are moved to your new bank automatically. Recurring card payments do not transfer; you must manually update each one to avoid service interruptions, creating an unnecessary administrative burden.
Martin Lewis's core message is simple: for ongoing subscriptions and regular bills, setting up a Direct Debit provides superior protection, easier cancellation, and greater convenience than handing over your card details. Consumers are urged to check how their subscriptions are paid and switch to Direct Debit wherever possible.
