What is a standing order?

A standing order is 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) and 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.

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.

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 or your account will go into an overdraft if you have one arranged. 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.

Standing orders can be made using the Faster Payments service, which means the payment should be made almost immediately if both banks are participants in the Faster Payments Scheme. If your bank does not use Faster Payments, it should be completed by the end of the next business day. 

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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