Standing orders are transfers that are executed regularly with the same amount to the same receiver, according to www.deutscheskonto.org.
Furthermore, standing orders are used for savings – for example, an automised savings rate to a call money account – or for the repayment of a loan.
However, most banks switched to the direct debit procedure for the repayment of loans; this is virtually the same with the standing order. The bank debits the same amount to the same receiver in an automised procedure and regular intervals.
That one can save money and time with standing orders, has already been established. Now, here are the details.
- One saves time at two points: You only enter the transfer order once and it is always executed in the same way.
There are people, who transfer money every month manually. Even if one sets up an order template (herein, the account data of the payment receiver and sometimes also the amount, as well as the purpose are saved), it always takes longer than an automated execution of the standing order. In the end, one has to log onto the bank’s website (online banking) or submit the transfer form at the bank.
But, thanks to standing orders, it is not necessary anymore to waste time on reminder notes, excuses, account search, etc. One can be 99.9999 per cent sure that the standing orders will be executed as planned.
- One saves money at two points too: Depending on the personal financial circumstances, one saves money with a timely executed standing order (no payment before the due date (too early!)), as overdraft facility interest won’t be charged unnecessarily or one even gets interest for the time that the money is still in the owner’s account.
Likewise, one potentially saves money compared to a payment after the due date, as one can be sure with a standing order that the payment will be timely and there will be no fears about reminder notes and charges, which happens when people plan to pay through online transfer.
- Execution date of standing orders
If one sets up a standing order, it can be at any desired date in the future at most banks. The only way a standing order will not be accepted is if the execution begins on the same day the order is made.
If today is the 5th of September, then one can set up a standing order with the first execution at the sixth of September as the earliest date.
If one chooses monthly as the interval, the next payment will take place on the sixth of October. If one sets up quarterly, the next payment will be executed on the sixth of December, and so on.
Depending on the provider, following intervals are common: weekly (only very few), monthly (very common), bimonthly, quarterly, half-yearly and yearly.
- Weekend and holidays: If the execution date is on a Saturday, Sunday or holiday, then the standing order will be executed on the following banking day.
For example, if the first day of October 2016 is a Saturday and one programmes the standing order to be executed on every first of the month, then in the month October, the execution would be on the third, as Monday is the first banking day of that month.
An advancement of the execution to the last banking day of the month, if the first banking day of the month is no banking day, – as practiced by some (public) employers – is not possible at private standing orders.
Changing and deleting standing orders: Standing orders can be changed or deleted anytime before the next execution. However, not on the day of execution, as the bank systems uploads them overnight.
If an execution is planned on the 13th of September, however, and it has to be changed or cancelled, this must be made on the 12th of September or earlier.
Standing orders can also be changed partially. For example, the receiver and the execution date stay the same, but the amount changes. This is a classic situation of rent increases.
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