Cheap direct debits for bank switching and rewards

Run out of regular payments required for free cash? Here are few easy direct debits that’ll help.

NB: The video from 2021 contains a handful of examples you can’t use now, so make sure you read the full list below.

How many direct debits could you need?

I’m a fan of having multiple current accounts. Some of this is practical. What happens if the app goes down and you can’t access your cash? But the main reason I have so many (23 at the last count) is to nab free switching cash and monthly rewards.

These accounts bring in hundreds of pounds extra every year, and are relatively easy to maintain. In fact once I’ve set them up I hardly have to touch them.

However, the downside is that the more of these accounts you have, the more direct debits you need. And even if you’ve got all the obvious payments, you might need some more.

Andy’s Top Current Account perks

  • £5 a month from the Halifax Rewards account
  • Free Disney+ with Ads via the Club Lloyds account
  • 7% interest from Santander Edge saver Account
  • Cashback on bills from the Santander Edge account
  • 1% cashback on spending from Chase Bank for a year

(You can learn more about the account perks and requirements on my huge list of current accounts.)

What is an “active” direct debit?

Quite a few switching offers and perks require an active direct debit to leave the account. Technically this could include any payment that has been taken in the last year.

However for the most part these direct debits have to come out every month to qualify – ruling out annual or quarterly payments.

You might also find when switching that the new bank wants the active direct debit to have already been paid from the old account. If you don’t have these on the account you want to switch you’ll need to set them up and have payments made before the switch date.

Finding new direct debits

The most obvious direct debits we have, such as our bills, will be eaten up quickly so I imagine you’ll need a few extras. Here’s a list that should sort you out.

Bill direct debits

These are the direct debits you’ll already have so you might just need to move them around to different accounts.

The first list here will most likely be best placed on the Santander Edge account as you’ll earn cashback on them – though check your supplier is included.

  • Energy bill
  • Council Tax
  • Broadband/Phone bill
  • Pay TV bill (Sky, Virgin etc if different to broadband)
  • Mobile phone bill (there could be multiple ones here)
  • Water bill

These bills aren’t covered by the cashback via Santander, so you could move them to one of the other reward accounts.

  • TV Licence
  • Some insurances (check it’s not cheaper to pay annually)
  • Vehicle tax (however if you pay monthly there’s a 5% surcharge)

With other memberships and subscriptions check the payment actually is via direct debits – some might use standing orders or “Continuous Payment Authorities” – where they have your long card number. This is how Spotify and Netflix charge you so they won’t count (though I’ve a workaround below).

Credit card direct debits

It’s always a good idea to set a direct debit to clear your credit card every month, or at least make the minimum repayment. If you’ve got more than one credit card that also means more than one direct debit.

But remember they need to be active every month… so you need to use the credit card every month.

If you don’t use a card very often you could put a set regular payment on there, such as paying for Netflix, to ensure this happens. And if you have more than one of these services and more than one credit card, you could get two or three regular direct debits this way.

Services this could work for include:

  • Streaming services (eg Apple Music, Netflix & Spotify)
  • Memberships (eg English Heritage, gym)
  • Subscriptions (eg food boxes, beer clubs magazines)

It can also work for some Buy Now, Pay Later services, such as Klarna. But you must make sure that you are paying the item off with a connected current account and not a linked bank card. Also be careful of the risks that can come with spending via BNPL.

PayPal direct debits

When you pay for something using PayPal, it will usually use a direct debit to take the money from your connected current account (make sure you connect your current account, not your debit card). But for this to count for your benefit it probably needs to happen every month.

But there’s a simple workaround here. When you add money to your PayPal account you have options of how to do this, and the most simple way is via a direct debit from your current account. In the app, select “add money”, type in how much you want to move and select the connected current account with the direct debit set up. It takes up to five days for the money to move.

Or if you want to automate it, you can use PayPal to pay for a regular service that doesn’t allow direct debits. This is how I pay for my Spotify, meaning every month I have a PayPal direct debit come out of my account.

Sadly this counts as a single direct debit from PayPal, no matter how many services you pay for this way.

Also, a word of warning. a few readers have told me they’ve had issues with these direct debits transferring. This has worked for me on a number of occasions, but it might be worth trying the other options first to be safe.

Read my PayPal review with features you might not know about.

Currensea card direct debit

Similar to paying with PayPal, if you use your Currensea debit card to make a transaction, it’ll use a direct debit to pull the cash through from your linked bank account.

There is a free version of Currensea, and it’s a handy back up to have when spending abroad. Here’s how to get a free £10 when you spend £150.

Charity donation direct debits

It might be worth changing how you donate (if you do). Though it’s easy to do this via payroll giving, you might want to switch to a DD to meet the criteria for an account.

If you’ve used all the above and still need more, then you can set up extra small direct debits to most charities. Check the requirements for the current account perk as some require at least £2 on each direct debit.

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Savings accounts direct debits

Savings accounts are great extra direct debits as you can send a small set amount over without having to pay for a new service.

You’ll also be able to transfer the money back to your current account – just check there aren’t penalties or restrictions to do this.

Sadly the Post Office stopped allowing payments in this way to their savings accounts, but there are other options. I think the best ones, if you’re happy to use apps, are via Plum and Moneybox.

You could also consider Park Christmas Savings, though bear in mind this works very differently to normal savings options.

There aren’t many that allow DDs but I’ve found the following:

Investing direct debits

It’s worth checking investment platforms too, with Vanguard a popular option. However, they may have quite high minimum amounts that can be added each month, or at least when you first open the account.

Plus bear in mind when you add money here there’s a chance in the short term that the amount transferred loses it’s value.

But if you are investing for the long term then this could well just be the cash you’re adding on a regular basis anyway.

Thanks to Chris who suggested many of these in the comments

  • AJ Bell
  • Clim8
  • Evestor
  • Invest engine
  • Nutmeg
  • Moneybox
  • Moneyfarm
  • Vanguard

Other direct debits

This final list contains low cost services or products you can pay for via direct debit but might not be part of your normal spending but you’ll get something in return.

So though you’re shelling out some cash, it might be worthwhile doing this for a month or two in return for that switching bonus if you’ve exhausted all the other options.

33 thoughts on “Cheap direct debits for bank switching and rewards

  1. Is there any quick option? I just got a week time to have one active DD from which money has been paid atleast once to count that as active

  2. I have been trying to find charities that will set up a direct debit quickly. The quickest by far is Cool Earth. They’re a great climate charity, so a worthwhile thing to do with your money anyway, and they have set up direct debits in just a few days (I’ve used this 4 times now). Most other charities seem to take up to (or sometimes over) a month to set up.

    1. any more such charity or option. I just got a week to setup and use

  3. While changing PayPal direct debit payment to a different bank account, I was surprised to discover that it is actually possible to use this single direct debit for multiple bank accounts simultaneously. So far I have used my single PayPal account to meet the direct debit requirements of three different bank accounts.

    1. How does that work?

  4. Thanks some useful ideas,

    Not really being “clever with your cash” but for people that regularly play the National lottery anyway that is also payable by direct debit as another option.

  5. Andy mentions Vanguard above. This is an investment platform that offers ISAs and a “general investment account”. It accepts payment in by direct debit but the minimum is £100 a month so probably not ideal for most people for the purpose we’re talking about here.

    However, I’ve found a number of other similar platforms that allow payments in by direct debit. The list (so far) is Clim8, Santander Investment Hub, Evestor, Moneyfarm, A J Bell, Nutmeg & InvestEngine. I haven’t looked into them in detail – the minimum mothly investment will vary, some may may charge (generally small) fees and. of course, they offer investments so there is some risk.

    However, I will specifically mention InvestEngine, which I have looked at a little more closely. TopCashback is currently offering £40 for a £100 investment and they seem to offer regular investment by direct debit (minimum £50 a month). There also seems to be a referral scheme. InvestEngine deals exclusively in ETFs (Exchange Traded Funds) and charges no fees itself – for the “do it yourself” option – although the specific funds in which you invest may charge their own fees.

    Clim8 seems to allow investment by direct debit, with a minimum of £10 a month, but I haven’t looked at it more closely than that.

    1. While Vanguard says the minimum is £100 its actually not this is for the intial set up. you can then change this to be whatever you want after this.

    2. Just an update on the investment platforms that allow deposits by direct debit:

      Clim8 has closed (I think it was an orderly close down so no investors lost money)
      eVestor has been taken over by Octopus Money. It’s not at all clear what their offering is.
      The Big Exchange is an ethical investment platform that allows deposits by DD. I don’t know what the minimum monthly amount is.
      BestInvest and Freetrade allow DD monthly deposits. Again I don’t know what the minimum is.

      Caveat. I have no personal experience of most of these. I was just researching at a time when I needed additional direct debits. I now have enough for my current needs so haven’t looked at any of these investment platforms more closely.

  6. Does a Vehicle Tax DD count, is there a minimum amount or is there no cap on DD’s?

    regards

  7. £1 direct debit site has been down for a few weeks now, but small direct debit is still up for running. i used them for the new TSB bank switch.

  8. I had almost all of my Reward A/c DD’s setup via multiple Birmingham Midshire Online Savings A/c’s….but had a letter stating they are withdrawing these accounts and they will all be closed. I had some Post Office Savings accounts but the transfer in DD Linked account option was removed so now you have to do a Standing Order or Transfer.

    It looks like the PayPal Top-Up works the same as the Post Office Saver does now…

    They are making it harder for us; I just need two new replacements now for my Club Lloyds Account…a Credit Card is an option but I rarely use it and I just want something I can set-up and forget about it (like the Birmingham Midshire accounts).

    Any new ideas….?

    Thanks

    1. You only need DDs for Club Lloyds for interest – the rate is 0.78% on £5k…!
      So move your £5k for 6 times the interest (Barclays Rainy Day 5%) or 3 times Santander Esaver 2.75%.
      £1500 still needs to be cycled through you Club ac to avid the £3 pm charge and get you mag/cinema tickets.

  9. Just a note of caution about using DDs from accounts used to top up your PayPal balance as switching DDs. I am in the process of switching an old TSB account to NatWest. The TSB account was linked to my PayPal account but I’ve received a notification from PayPal that “we have been unable to add or update your bank account details”. I note that the NatWest switching FAQs say that, if you’ve allowed third parties to access your financial data, that won’t be switched. Whilst transfers to PayPal are effected by Direct Debit, I seem to recall that the actual linking is done through Open Banking which I’d imagine falls into the unswitchable third party access category. Not a major problem in this case as the NatWest switching bonus does not require the DDs to be in place and active before the switch, but for others (e.g. Nationwide) it could be.

    1. Actually, I’m not sure you can use topping up your PayPal balance at all for one of your switching DDs any more. When you link a bank account to your PayPal account a DD is indeed set up. But, when you go to PayPal to transfer funds to your balance the instruction is to go to your bank and make a transfer in the usual way. Those funds are transmitted by FPO (Faster Payment Outwards) not through the DD. I presume the DD only comes into play when you make a purchase using PayPal from the linked bank account as the payment method.

      1. Paypal will pay to another person’s paypal account (for instance a friend or family member) a Direct Debit for you from a Bank you have listed with them, where the DD is needed to go out.
        Likewise, that person can pay you the same back by a Direct Debit from one of their own listed Banks needing a DD to go out.
        In each case, the amount needs to be more than you already have in your Paypal account, as they will take the payment from there instead.
        It needs to be actioned each month, but no need to actually purchase anything so long as you trust your payee to pay it back !!!
        Lee

    2. strange, my money box and plum switched without effort from Halifax to TSB. In the past one of them failed to transfer through once

  10. I find myself needing another DD for a switch so have been looking around for new options. Looks like Chip uses direct debit to take payments and the savings rate of 0.61% is respectable in the current climate. Plus there’s the £20 welcome bonus code CLEVER20 that Andy mentioned in his recent Chip review. So I think I’ll give Chip a go, provided I can work out how to minimise the autosave amounts – it’s often not easy to fathom how these app-only things work until you’ve actually installed and started using them.

    1. I don’t think Chip uses DD since it requires the long card number and takes payments from your current account using your card.

      1. Thanks for that Jonathan. I was just going from what Chip have in their Terms Of Use – “5.9 When you register for the Service, we will ask you to set up a payment method, such as a card or direct debit, to allow the processing of Save. ” Haven’t got round to opening a Chip account yet so can’t comment on the actuality.

        1. Update: I raised this with Chip customer support. They have informed me that “direct debit is not an option at this time”, despite what it says in the T&C.

  11. Scottish Widows do an Instant Saver 2 account which accepts direct debit payments, though payments must be at least £10. Their E-Cash ISA 3 also accepts DDs.

  12. I have set up a DD with Park Christmas savings. I pay around £1.70 per month and after 12 months receive 2 x £10 M&S gift cards in the post. There is no admin charge involved but of course money saved is not covered by financial services

    1. Thanks for this Mags, a good option!

  13. Hi Andy!

    I would like to ask can we extend the date of switching date. Like if I set a switching date on 2/09/2021 can I call the bank and after them to change my switching date?

    1. Hi Raj. Hmm, not sure. It’s worth asking them and getting confirmation that it won’t impact the bonus if you do this. If it goes wrong you can then call back and get them to check the recording of your previous chat

  14. You could also sign up to trial subscriptions of magazines, there are plenty online which are 3 magazines for £1 and you can cancel within the trial

  15. I felt uneasy about what Nationwide classed as “active” when considering Direct Debits that qualified for their £125/ £100 switching incentive. I sent them a secure message which I have added below along with their reply. I hope that people will find them helpful.

    My message
    I have looked at your online information but it does not provide an answer to my question. I am an existing Nationwide member and I am considering switching an account with another bank to a new second FlexAccount taking advantage of your £125 offer.
    Before taking action I should be grateful if you would clarify the following point for me, please.
    The Switch terms include moving 2 active Direct Debits. I know what a Direct Debit is but I am not sure what “active” means in this context. Can you let me know, please?
    I look forward to your reply. Thank you.
    Peter Lewis

    Nationwide’s reply
    Hello Mr Lewis,
    Thank you for your message
    Certainly, this is something I can clarify for you.
    Active Direct Debits are those which are being paid monthly or on a regular basis.
    For as long as the direct debit is being requested on a regular basis, this would be considered as active.
    If there is anything else I can help you with Mr Lewis, please reply to my message.
    Kind regards,
    Melanie
    Customer Consultant

  16. Thanks. Also, I’m self-employed, so I set up Direct Debit payments to pay into my tax account each month. I spoke to a HMRC rep who said I can have as many Ds as I want, from different accounts that need a dd. To make sure I know which account has paid into my tax account, I set the dds for different amounts, which must be > £1; so £1.05, £1.25 , £1.45 etc…

    1. The direct debit payment on HMRC’s website says

      “Direct Debit (one-off payment)
      A single, one-off Direct Debit payment. You are covered by the Direct Debit guarantee”

      Does anyone know if this would therefore be classed as an ‘active’ direct debit as Lesley has mentioned here? Is this something which has recently changed? (Did HMRC’s DDs used to be recurring?)

      1. Never mind – found the HMRC ‘budget payment plan’ which appears to be the recurring weekly or monthly DDs for self assessment and VAT payments.

      2. it works for me Joe

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