What is a standing order? - Banking - Guides - Moneyfacts

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What is a standing order?

What is a standing order?

Category: Banking

Updated: 04/10/2016
First Published: 29/09/2016

Standing orders are a way of setting up a regular, fixed payment from your bank account.

You can set a payment to be taken at a certain frequency (for example, the 1st of each month) for a set amount of time, such as six months. Your payments will consist of money set at an amount chosen by you.

You can normally set up a standing order by:

  • completing a standing order form and giving it to your bank

or

  • setting up the standing order in branch, over the phone or using online banking.

The difference between a standing order and a direct debit

Essentially, a standing order is an instruction to your bank, whereas a direct debit gives permission to a company to take money from you. You are the only person who can change the date or payment amount on your standing order. This is the main difference to a direct debit, where these details can be changed by the person or organisation you're paying.

What if I don't have enough in my bank account to pay a standing order?

If there isn't enough money in your account to pay a standing order, you may be able to take advantage of a buffer zone, if your current account has one. This is basically a small interest-free overdraft that your bank won't charge you for if you creep into it.

Exceed the buffer zone and your bank or building society may not pay the standing order, and they may charge you a fee. If paying a standing order pushes you into an unauthorised overdraft, you may have to pay additional charges as well.

If you know beforehand that you won't have enough money in your bank account, the best thing to do is arrange a temporary overdraft with your bank to pay the standing order. Alternatively, you could try to negotiate a later payment date with the person in question.

If you miss standing orders regularly, you should consider changing payment dates or paying by a different method

How long does it take for a standing order to reach the recipient?

Generally, it takes three working days for a standing order payment to move from one bank account to another, so your money may not move over weekends or bank holidays. The bank usually submits the payment instruction on day one, when your account is debited. The payment is then processed and reaches the recipient's bank on day two, which then updates its accounts and makes funds available in the recipient's bank account from the start of day three.

How do I cancel a standing order?

You are the only person that can cancel a standing order. You can cancel a standing order at any point in branch, over the phone or via secure online banking. However, make sure you inform the person or organisation in receipt of the payment before you do, as you could incur fees or penalties for non-payment. Remember that if you don't pay a bill on time, this could also affect your credit rating and appear on your credit file.

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Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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