PAYING bills by Direct Debit is now as regular a part of our personal finances as finding a few spare pennies down the back of the sofa. Remember, put them in a jar each time, it'll soon mount up.

According to BACS (bacs.co.uk), nine out of ten British adults have at least one Direct Debit payment set up with 73 per cent of household bills paid using this simple and effective system.

On the whole, it's a very consumer-friendly, secure way of making regular payments to companies for the likes of your mobile phone, gas or electricity and insurance. But recently, an experience I've had with a Direct Debit has taught me some valuable lessons I want to pass on to you.

I had a recurring monthly payment with a company for a rolling monthly subscription that I didn't need any more. So in September 2015, I got in touch with them to ask them to cancel the contract. They replied asking for more information but after that I had no further response from them. Nearly five months later, in February 2016, I decided to go ahead and cancel the Direct Debit. This was a bad move.

Soon after, a debt collection agency got in touch with me. There were no chasing letters and certainly no official letter to say my account was in default – just the debt collection letter.

Fortunately, once I’d explained the situation to the people involved, they stopped the collection process. But the company that payment was to carried on totting up my debt. Even worse than all that, my account with them was now in default and my own personal credit rating had taken a tumble from AA to DF in just five months.

This was not good. And all due to an issue over cancelling the contract and me believing that by cancelling the Direct Debit, that would be that.

My case is currently being assessed by the Ombudsman Services but I'd hate anyone else to suffer as I have.

The moral of this story is don't let companies ignore you. Chase, chase and chase again. You don't necessarily need to spend lots of time doing so. If you have encountered similar problems from a company ignoring your requests to cancel a regular payment or a contract, you can raise your case simply and quickly via Resolver.co.uk. We'll then prompt you to follow-up if you don't get any replies and help you escalate it to the Ombudsman or Regulator if needed.

And don't forget to get in touch with me too – I want to hear about your experiences.

This week I've also noticed that next month BACS are about to embark on a public consultation to find out how Direct Debits can be changed or improved. When it launches I'll let you know more and provide details of how you can take part.

But talking of Direct Debits, here are some things you need to know about them and other similar payment methods to be aware of.

The Direct Debit Guarantee

This is very important. It's the little bit of wording at the bottom of each DD form you fill out. And that you probably never read. But it protects your rights if something goes wrong. Any organisation using the Direct Debit Scheme is vetted and monitored and your bank or building society protect you if there are ever any errors in the payment of your Direct Debit.

For example, the guarantee states you must be told in advance of any changes to the amount, date or frequency of the Direct Debit while if there is a mistake made with the payment, you are entitled to a full and immediate refund of the amount. This is made by your bank or building society but if it's found there was no error, then you must pay it back.

The guarantee also allows you to cancel your Direct Debit whenever you want. It's often as easy as pressing Delete in your internet banking. BUT you should always notify the organisation or business being paid and you may need to sort out written confirmation too.

What about a CPA?

Sometimes recurring payments aren't actually a Direct Debit meaning you won't be covered by the same guarantee.

For example, it may be a Continuous Payment Authority or CPA. This is often the case when you enter your card details on a website for a subscription such as a gym membership or online streaming TV or music service. A Direct Debit is set up with your account number and sort code. CPAs may often be set up using your long debit or credit card number instead.

It is likely any regular payments coming from a credit card are a CPA, as are any continuous payments from a current account that weren’t set up as Direct Debits or Standing Orders.

Also, CPAs may not be for a fixed regular amount. So always be sure of what you are signing up to and that it could change.

Remember, you do have a legal right to stop CPAs at any time. You can usually do this by contacting the company involved. Naturally, you will have to cancel the service you are paying for. You can also cancel the payment directly with your card issuer who must stop payments immediately. You can find out more from www.fca.org.uk

What else can you do to make a regular payment?

  • If you have any CPAs, check whether the company or organisation involved accepts payment by Direct Debit. If so, switch to this. Over the past few years, many smaller companies have joined the DD scheme, so while you may initially have had no choice, things could've changed and you can use it now.
  • If the company involved will let you make a manual cash or online payment each month, then you could do that. But it is hassle and you may forget so it would be safer to at least use a Standing Order payment via your bank or building society account.
  • Get a prepaid card. You must top this up with cash before spending and crucially, you can't spend more than is on the card. No credit check is done. Not all of these will allow recurring payments though so you need to check which ones do and what they can be used for.
  • Pay by PayPal. This is becoming even more common these days. It's not just used for doing eBay transactions. However, make sure you know where the Cancel button is by reading up on the FAQs so if you have to stop the payment, you'll be able to do so swiftly.
  • Got a complaint to send or a claim for compensation to make? Start it quickly and easily at resolver.co.uk with our templated emails that get results time after time. Follow us on Facebook too at facebook.com/resolvercouk or on Twitter @Resolvercouk

James Walker is founder and CEO of Resolver.co.uk