Be ready for monthly debit orders

What happens if you don’t have enough money in your account to meet a debit order?

If you don’t have enough money to cover one of your debit orders (perhaps you have many, like I do — medical aid, gym, insurance and so on), what will happen? Your bank will return the debit order marked “not provided for” to your creditor’s bank account. Your creditor can then re-submit the debit order the following month.

According to the Ombudsman for Banking Services, the creditor can’t increase the value of the debit order to recover any arrears, though. Separate debit orders must be submitted by a creditor for a current payment and an arrears payment.

If the debit order is unpaid on two occasions, the creditor must then remove it from your account system, unless you give new authorisation. So make sure that, even if you miss one payment, you don’t miss two, or you’ll need to renegotiate.

You can usually avoid missing payments by budgeting, so you know exactly how much will come off your account each month for debit orders. They’re not unexpected expenses — you know they’ll be coming off each month (usually on the first of the month). Once you’ve calculated what you need each month to meet these payments, you can budget for grocery shopping, entertainment and so on.

Read more news, blogs, tips and Q&As in our Smart Money section. Post questions on the site for independent and researched information

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