Dear LPG

I read and took note of everything that DS had to say on the subject of ignoring the details of direct debit renewals at your peril  (►►►). 

I learned a long time ago that most direct debit agreements have a clause which allows the people or organisation that will receive money because of it to adjust the payments upwards as long as they inform you. We often follow the advice and skim the letter from the companies we have set them up with in the secure knowledge that they will just be paid automatically.  In my experience, the actual cost of renewing is often hidden in all the other narratives on the page, and we don’t check.

There is a failsafe that might be useful to put in place to ensure this does not happen.

My answer has been to open a second bank account to pay my bills and direct debits.  I keep very little money in it and transfer what I need from my main account only when I know it is required. That way, you have to check more closely and do the research to learn how much the company you are paying plans to charge you.  

When these renewals come around, if you have not transferred the money, either the bank or the company trying to get money from the account will soon contact you. At this time, you will have an opportunity to see just how much more they want to take and then haggle, just as DS suggested. Most of these companies won’t want to lose your custom, and they will contact you.

There is another excellent reason for doing this.  It worries me that so many people are happy to offer the companies the bank details of their central bank accounts.  It is equivalent to opening your electronic purse and telling all the people you give a direct debit mandate to that they can take what they want. The fact that they often need to take your Card verification code gives them an extra key that they might abuse or inadvertently give to a less scrupulous organisation or thief.  If your electronic purse contains your pension and all your other income, your vulnerability is so out there.  

A second bank account where you deposit only the money you need in preparation for paying it out will also limit the money available to such people at any one time.

In this world of scams, it is essential to keep an eye on and limit what these companies can take.  Having a second bank account where your direct debits live with minimal money until you need to pay it out has pros and cons, as does everything else.  But when organisations like this fail to get their money, they will contact you, at which point you can do your haggling and know what you are paying, before decanting the amount they need, so that they can try again and get it once you are aware of what is going on. 

SW, Beckenham 

LPG found a little related information

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