Using bank standing order to settle regular bills

Chinedu Nduka has some regular bills he pays including sending money to his loved ones monthly. As the firstborn and most successful child in his family, he sends a fixed amount to his parents for their upkeep every month.

He also has a life insurance for his wife and children, which requires him to pay a regular premium. He has fixed allowances that he gives to his siblings who are still in school.

 Nduka also has a special savings account which he funds regularly to ensure that some reserved funds that he can fall back on to fulfil unexpected financial needs.

Sometimes, he forgets to pay some of the bills and have had to be reminded.

 But experts say Nduka may not have to worry about that anymore; all he needs to do is to give a standing order to his bank to do the job for him.

To ensure that he is consistent with the payments, he will have to instruct the bank to always deduct these funds and pay them into the accounts of those that he has to credit. When this is done, Nduka knows what is left for him to spend for the rest of the month.

 Standing order can help a personal account owner to be consistent in paying his essential bills. It is an instruction that an account owner gives to his bank to regularly deduct a fixed amount of money from his deposit (payer) and be paid into another bank accounts (payees).

In some countries, this is used for paying rents. It might not be suitable for rent payment in Nigeria because rents are not paid monthly but usually yearly. It is also not suitable for variable bills such as prepaid electricity bills, gas consumption and other expenses that are not fixed.

But it is suitable for repaying your loans.

 Holders of savings account may not enjoy this facility; it is for current account holders and other accounts accepted by the bank.

What it takes is just for the customer to fill a form requesting for a standing order. The payer will indicate the amount and the bank account to be credited with the name of the beneficiaries; when the payment should be made every month.

At the point of filling the form, some banks may want to charge certain fee for the standing order but the payer will not be charged for the transfer once the regular payment starts.

A standing order is a service that does not attract charges either within the same bank or to another bank.

According to a report by www.moneyadviceservice.org.uk, there are some benefits to be derived from a standing order. They are presented below along with the requirements to set it up.

 It is useful where you can’t use direct debits: it is often meant to make regular payments to a person as a child at university, rather than to a company.

You can use it to move money between your own account: for example, if you want to pay a set amount each month into a savings account.

• You can set up standing orders from current accounts and most basic bank accounts. Some prepaid cards or credit union accounts can also be used for standing orders.
• You usually need to be over 16 or 18 to use standing orders, depending on your account, so check with your bank.
• You can complete a standing order form and give it to your bank. You will need the account number and sort code of the person you are paying.
• With some banks, you can set them up online or over the phone.
• You can also cancel a standing order at any time, or change the amount, payment date or how often they are paid.
• Banks don’t charge you for setting up standing orders.
• Watch out for refused payments. Just like the direct debits, if you don’t have enough money in your account to cover the standing order, your bank can refuse to make the payment.
• Take note of the details. Double-check the bank account details you give, the amount and the payment date.
• It is your responsibility to ensure the payment is for the right amount, for example, for a mortgage payment, if the interest rates change.