The Danger of Debit Orders

Debit Orders

Most consumers have several debit orders on their accounts. They assume that the debit order is for a fixed amount on a fixed day of the month.  Is this in fact the case?

Can a debit order go off on a different day? Can a debit order go off more than once a month?

debit orderIt is interesting to note that if you consult the rules regarding debit orders (rules which the major banks wrote a long time back) and have signed a contract/debit order form then a debit order from one of your creditors can ask for money from your account up to twice a day on any working day of the month and if there is money available in the account draw it. This does not have to be on a particular day, (it can in fact be every working day of the month) although if your payments are up to date and are going well then the debit order normally goes off on the day you agreed to with the creditor.

Money Grabbing

This often happens to consumers who enter debt review in the first month or two if they do not move their salary to a different account. A common but often surprising practice is for banks to allow other divisions within their own organisations (like vehicle or bond finance) to draw money from a current account using that debit order so as to to settle other accounts. Check your debit order fine print to see that this is mentioned and you have probably agreed to it (oh, but wait you probably don’t have a copy…too bad).

A recent change (beginning this March) now means that creditors can collect up to R30 000 daily via debit orders from their clients’ accounts.

 

 

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