Financial Spring Cleaning: Reorganising your direct debits

It can be easy to neglect your direct debits. Whether you signed up for an expensive gym membership with good intentions but have never used it or are paying for a music streaming platform but are not getting your money’s worth, there is no time like the present to take control of your finances and reorganise your direct debits.

They can provide greater convenience and flexibility than paying for goods and services manually but if you don’t keep a close eye on exactly what you are paying for and when, costs can quickly add up. You may not notice a £5 payment leaving your bank account every month, for example, but over time, you can end up paying through the nose for services that you don’t use.

Spending a couple of hours rummaging through your bank statements may not be the most exciting way to spend an afternoon but identifying any money that could be better spent elsewhere may even help you save towards a particular milestone such as a wedding, first home, or retirement.

In the second instalment of our Financial Spring Cleaning series, we take you through the process of reorganising your direct debits on your terms so you can keep tabs on your spending and be well on your way to mastering the art of money management.

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1. Reassess your payment dates

If you get paid on the same date every month, reassessing your payment dates can be a great way to ensure you only pay for your direct debits when you have the financial stability to do so.

This can prevent you from being left out of pocket and allows you to align your direct debits with your cash flow as it fluctuates throughout the month.

It is a relatively simple and straightforward process, but it is worth remembering that it can also take a couple of days for any changes made to take place on a rolling basis going forward.

2. Review your subscriptions

In today’s increasingly digital landscape, most of us consume content from the second we wake up until the second we fall asleep, and it can sometimes feel as if our lives have become consumed by subscriptions. When it comes to spring cleaning your finances, reviewing your subscriptions should be one of your first steps.

If you signed up for a premium subscription package with Netflix, Amazon, or Disney Plus but are the only person that watches it on a regular basis, switching to a basic subscription package can prevent you from wasting money on additional features that you have never used and are unlikely to ever use.

To thoroughly reorganise your direct debits, however, you must be ruthless. Cancelling any subscriptions that you haven’t so much as looked at in the past six months, for example, can help you claw back money that can be spent on something a little more beneficial to you.

3. Cancel any old direct debits

If you have identified any direct debits that you no longer want or need, you must still manually cancel them to prevent any more money from leaving your bank account unwillingly.

This may sound like an obvious point, but it is a common mistake and can end up costing you a considerable amount of money over time, with most people simply assuming that they have been cancelled from the other side.

You must also check the terms and conditions of your direct debits to ensure you are aware of any minimum terms, notice periods, or hidden fees that may be applied if you were to suddenly cancel.

Most gym memberships, for example, come with a minimum term of six or 12 months with cancellation usually only permitted in exceptional circumstances, such as relocation or medical grounds.

4. Evaluate any Buy Now, Pay Later plans

Buy Now, Pay Later plans have exploded in popularity in recent years and are now used by millions of customers in the UK. They can allow you to purchase a particular item online or in-store and pay for it in manageable monthly instalments over a predetermined amount of time.

Some of the most popular Buy Now, Pay Later plans also don’t require any upfront fees so you may not even be expected to contribute towards your purchase for the first 30 days. They can, however, also accumulate interest if your direct debit is attached to a credit card with a running balance.

By evaluating any Buy Now, Pay Later plans, you can gain a better overview of your monthly outgoings, and set regular reminders to ensure you are prepared for any direct debits that are scheduled to leave your bank account before they do.