Martin Lewis: Take my direct debit challenge: can you save £ 100 in just 5 minutes?
Today, I put the glove on. I want to know how many of you are wasting money letting money flow out of your bank accounts without knowing it, on regular payments to services and businesses that you no longer use or have Not needed anymore. It shouldn’t take long and it can be hugely lucrative.
To get you excited before you start, here are some of the hundreds of tweets I received after talking about it on This Morning a few days ago… Louise tweeted “Literally a 5 minute check on my online banking and I found a phone bill I was paying for. a phone that I no longer own and a subscription that I no longer even think of receiving! I was able to cut around £ 100 per month! Thank you Martine! and Rob “Resume maker software £ 14.99 per month?” I made a modification on a CV and have not returned to the site since. It was 6 months ago. They never even told me that they made me pay ”
Likewise, if you follow this and record let me know by tweeting @martinslewis.
There are three types of regular payments
Most of you are familiar with two, but the third type is the trickier.
Direct debits. Typical use: Energy and utilities. You give a business your bank details and permission to debit your account if necessary, and they decide what to take and when, but you have the right to ask the bank to shut it down – but first make sure you’re out. contract.
Standing orders. Typical use: Regular payments to people. Here you set up an automated instruction to pay a business or person a fixed amount, and you set the frequency. Cancellation is easy through your bank.
Recurring payments. Typical use: Subscriptions, payday loans or pornographic sites. These were once known as streaming payment authorities – where you give a debit or credit card number and the business can accept payment whenever they want. Still, they look like single transactions, so they’re harder to spot.
It’s usually easier to cancel them through the companies themselves, but sometimes they play hard – since 2009 you have the right to cancel with the bank, although some staff mistakenly say you can’t.
How to find regular payments
Standing orders and direct debits are easy to locate. If you do online banking, there is usually a page that lists them, so it’s easy to check (it’s best to do it this way so that it also includes currently suspended subscriptions). If not, you can request it.
Recurring payments mainly consist of going through statements to verify. Some apps like smart-bill.co.uk and yolt.com can help you through the open banking tool. If you find businesses you haven’t heard of, try Google or your bank.
Don’t be fooled into keeping payments you don’t really want
I have already written about my shopping money mantras – for the skint, “Do I need it?” Can I afford it? Have I checked if it’s cheaper elsewhere? or the non-skint, “Am I going to use it? Is it worth it? Have I checked if it’s cheaper elsewhere?” Answer “no” and you shouldn’t buy. Yet we also need to apply a similar logic to regular payments. Yet, we often do not take into account the money that comes out of our accounts.
Even so, many people may have a hard time deciding which payment to keep and which to cut. And especially with subscription services, they know there is a powerful psychology here.
Companies use what I call the “inertia dividend”. It is no coincidence that many subscription companies are successful. We humans are naturally predisposed to dislike losing anything that we have. A lot of people wouldn’t sign up for a movie service that they didn’t really need if they had to pay for it, but would do so for a month’s free trial. They go into it with a view to undo it at the end, but by then they get used to it and now getting rid of it means a loss – and we don’t like the loss.
The lust for such things does not bounce like a rubber band. We tend to feel the loss of a service much more strongly than the joy of winning it in the first place. So, be brutal with yourself, especially at a time like now.
Decide what to keep and what to lose
It is often a struggle between logic and instinct. Here are some points to help you:
1. The obvious divide – where you are paying for something unnecessary. A cameraman on one of my shows once confessed to me: ‘I found out that I was paying £ 1,000 in council tax on my OLD house’. Others find that they are paying insurance for old, long forgotten mobiles. If this happens, always try to see if you can get the money back (however, you are not always entitled to it).
2. Things you don’t need but want, ask yourself if it’s worth it? There are some things you want but don’t need, so the question is, is the payoff you get worth it? Think about the annual cost, £ 8 / month equals £ 100 / year – so if this is a TV subscription that you only use a few times, is it worth it? Otherwise, cancel or try to find something cheaper. As Jo said: “I sorted my bills in January and canceled the gym (I went twice in 2019), saving £ 300 / year.”
3. The things you really need – can you do it cheaper and get the same. Check if it’s a good price online or through comparison sites and consider haggling. If it’s not good value for money, use it as an incentive to change, whether it’s energy bills, broadband, water bills or more, see what you can do to save.
Comprehensive help for everyone at www.moneysavingexpert.com/moneymakeover Martin Lewis is the founder of MoneySavingExpert.com. To join the 13 million people who receive their free weekly Money Tips email, visit www.moneysavingexpert.com/latesttip