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How does automatic debit work?

Automatic debit is the best way to settle fixed debts without running the risk of delaying payment and paying unnecessary fines and interest. This situation is very common among people and can occur because of forgetfulness, for example.

In this scenario, direct debit is perfect for those looking for security, practicality and do not want to accumulate debt. This payment method is offered by many financial institutions and credit card companies, for example, and can be used by many people. To learn more about how this works, follow this article until the end.

What this article covers:

What is automatic debit?

Direct debit is a way to pay monthly debts with banks and other companies. As the name suggests, this method of settling debts is done automatically and not manually, as it usually happens.

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In this context, there is no possibility of bills passing their due date and, because of this, they do not generate late fees and interest accrual. This happens because, if the automatic debit is triggered by the customer, whenever a debt is generated, the bank subtracts the amount from the user’s account before the due date.

To use automatic debit, this option must be activated and this must be done with the institution where the person is a customer. Many companies offer the possibility of activating even over the internet.

What is the difference between direct debit and direct debit?

A concept very similar to direct debit is direct debit. But don’t get confused: the second option works based on the transaction made punctually with the money in the account, that is, it is a payment made only once. The first is a scheduled monthly payment made regularly.

What are the advantages of automatic debit?

Using automatic debit to pay off debts has some interesting advantages that can make a difference in the customer’s financial life. The main benefits are:

– Payments always up to date;
– Cashback (some institutions offer this possibility);
– Credit limit released at the same time (in the case of credit cards);
– Improved financial planning.

These are the most relevant, but depending on each bank, there may still be other advantages of using this payment method.

How does automatic debit work?

How it works is very simple: every month, automatically, the bank subtracts from the customer’s account the amount referring to the account that must be paid.

How automatic debit works

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In practice, it is almost the same thing as taking the account slip to a lottery, for example, and making the payment in cash with the assistance of the attendant. The big difference is that no manual effort is required in automatic debit, since the bank’s own system does everything itself.

These automatic transactions are recorded in the account movement indicators, such as the statement, for example. Therefore, it is possible to observe when money is subtracted and what value is used in this operation.

Which bills can be paid with direct debit?

This type of service makes it possible to pay many bills, but it is more suitable for those that are fixed (even if they have variable amounts). Things like credit card bills, electricity, water, telephone, internet, tax installments (such as IPTU), school fees, health plan, various courses and even condominium fees are some common examples.

Who can use direct debit?

Anyone with a bank account can use this service, as long as the institution has it (most do). So, just get in touch, through official communication channels, or even through internet bankingand request that payment method.

It is important to remember that the service is indicated for those who have bills that must be settled monthly, such as those mentioned in the previous topic. For further information, contact the institution where you have an account and ask questions.

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