Money Saving Expert’s Martin Lewis has long been crusading for better money management – and now he’s turned his laser-focus ire onto Direct Debits.
We’ve all used Direct Debits – whether it’s for magazine subscriptions, your phone bill, or any other type of contractual standing order. However, one of the main problems with them, particularly for those seeking to take greater care over their personal finances, is that they occur without your interaction. Once set, it operates on the principle of fire and forget.
And forget is precisely what many people do. Just with any sort of subscription service, it’s all too easy to forget you’re even paying for it – until the money’s taken from your bank and it’s too late to claw back that wasted cash.
Now, Martin Lewis, who founded the consumer advice website Money Saving Expert, is attempting to get us all to think about the danger that Direct Debits can pose for those struggling with their money.
Writing in the Sunday Mirror, Lewis declared:
‘Millions let cash drip from their bank accounts for things they don’t really want, like unused gym membership. Online forum poster Tuftyhead said: “We found we paid £400 insurance for an old phone our daughter had upgraded four years before.” So check your direct debits and standing orders and, assuming you’re out of contract, cancel any you don’t want, don’t need, or just aren’t worth the cost.’
As such, Lewis has offered a solution to cutting out a few of those unnecessary Direct Debits out of the equation. He advises everyone who has them set up to consider three critical points…
- Do you actually need to use Direct Debit for this payment?
- Are you getting value from it?
- Is there anywhere you could this product or service cheaper?
Answer no to any of the three and Lewis’ advice is clear: Cancel that Direct Debit.
He suggests that we should all be checking for Direct Debit payments that you don’t recognise – not simply because of the threat of fraudulent activity; far more likely, it’s simply a case that it’s a Direct Debit you’re paying for without even remembering you signed up for it in the first place. And Lewis is keen to stress that everyone has the right to stop these payments themselves without bringing in the bank.
Beyond warning of Direct Debit dangers, Lewis has also taken time to explain the two biggest financial sins going. Are you guilty of them?
- ‘I know I’ll never use it, but…’
Gym memberships, Netflix and other movie subscriptions, dating sites – you name it, we sign up for it without really thinking we’ll get much use out of it. But what’s a tenner a month? Or even fifty quid a month? Well, Lewis reckons we need to stop seeing all those payments as a monthly recurring charge, but an annual one. Those tiny charges soon add up over the course of a year and seeing it that way from the start may discourage you from signing up.
- ‘I’d no clue I was stilling paying for that…’
Lewis thinks this is even worse than paying for services you know you’ll never use is to keep paying for services you didn’t even know you were paying for! These sort of things end up hidden in the back of your mind (and your bank account), quietly sapping away your hard-earned dosh. Lewis cites real-life examples including council tax for old houses, mobile phone insurance and white goods ‘long since dumped.’
So, is Martin Lewis bang on the money: Is it time you slashed all your unnecessary Direct Debits and took greater control over your personal finances?