Credit transfer and direct debit. What is the difference?

Nomenclature, specific to a given industry, often causes ambiguities, errors and raises justified anxiety. Because when we do not understand the terms we lose confidence and we feel that someone wants to cheat us. This is even more difficult when we meet with the financial or credit industry. Mistakes that occur in the context of deadlines: direct debits and credit transfers occur extremely often. Seemingly they mean the same thing – in practice, they talk about something else. Let’s check what are the main differences and what makes each of these terms stand out.

Both credit transfer and direct debit are various banking services that relate to financial transactions. Both are also performed within our personal accounts. Their similarities actually end there, because most of the elements definitely differ from each other. Let’s start in turn.


Transfer order pattern – what’s going on?

money loan

A transfer order is a kind of authorization of the owner of a given bank account. The simplest and illustrative explanation: the account owner authorizes the bank to send from this account a certain amount of money, also to the account specified by him. This applies to both permanent transfers, i.e. those which we make regularly, at intervals. Among them we can distinguish bills, alimony or, in the case of employers, the salaries of their employees. It is important that the standing order for the transfer order be unchanged – this applies to both the transfer amount, destination account and repayment dates. So it is an extremely convenient solution, especially in the case of permanent, important transfers or numerous transactions. This type of relief is extremely useful and many of us will definitely take advantage of this opportunity. Finally, the risk of not paying the bill or forgetting about an important transfer is practically minimized to zero.


Print order transfer

Print order transfer

Transfer orders can also be ordered using the available templates for a given print. On a small piece of paper, in windows resembling rectangles, you should properly complete the details of the client and the recipient. Thoroughly analyze, we must complete the print with:

  • name of the recipient – i.e. the name and surname or name of the company that will receive the amount from us
  • recipient’s invoice number – this element is extremely important, therefore it is recommended to enter it several times
  • amount – expressed in USD
  • our invoice number – the payer’s invoice number
  • personal data of the client – and therefore personal data of ourselves
  • title – the title of the transfer, which appears on the account. It is good that it should be unambiguous and indicate the purpose and author of the transfer


Direct debit – what is it?

Direct debit - what is it?

For a change, let’s focus now on the so-called direct debit. Although it sounds similar, its task and form of implementation is different. Yes, it is a regular transaction, but in this element we do not set a fixed amount for the transfer. To make an order, complete the form that is the creditor’s authority. In this element, the creditor is the institution that is the party that invoices for the services (e.g. the company performs an order for us). The authorization is for the creditor (in this case – the company) to be able to debit our account with a given amount, which changes with the scope of services offered. Therefore, it is also extremely important help, facilitating us timely repayment of the changing commitment. This solution may prove to be extremely beneficial for persons ordering a significant number of variable orders. So if we have a problem with watching the changing amounts of the transfer – it is worth considering the option of direct debit.

In this element, it is worth pointing out an example, which is direct debit plus. It is a cashless and quick way to pay phone bills. The implementation of the command is extremely transparent and clear. First, Plus, every month sends to the bank branch information on the amount due for which the subscription should be paid. The bank shall regulate it within the period specified on the binding document. Of course, the owner of the phone is informed about taking such actions, usually by means of an SMS message. This example best illustrates how much simplicity this process is.

Based on the above descriptions, we can easily observe the leading differences between a credit transfer and direct debit. The main difference is that the consumer or invoice issuer is authorized to determine the amount of the permanent transfer due. While in the case of a transfer order, the account owner decides, while in the case of a direct debit, the person making the invoice is the decisive person.