Readers' lives

Direct debits ... charges on pension plans ... BT Chargecards. Each week we answer your letters on everyday financial concerns and explain how to make more informed choices

Are direct debits such a good thing for the man in the street? They seem to favour banks and businesses more. FH, Newark

Banks and many businesses are very keen on direct debits because they provide a cheap and efficient payment system.

With a direct debit you authorise a business (for example, an insurance company) or other body (for example, your local authority) to take money from your bank account on a regular basis. The amount is decided by the organisation receiving the money and does not need your specific authority.

This contrasts with standing orders, where you decide the regular amount to be paid. This can be inconvenient where you expect the amount paid to change. If, for example, you pay your mortgage by standing order, you have to fill out a new order each time the mortgage payment changes.

As well as avoiding the hassle of writing cheques or changing standing orders, many businesses - such as the electricity companies - will give discounts to customers who pay by direct debit.

But convenience has its catches. Many people don't like the idea of someone else having direct access to the money in their bank account. There is no doubt that mistakes are made and, if you use direct debits, it is important to check your bank statements carefully.

There are some safeguards. You have to be given 14 days' notice of any change in the date of the debit or the amount debited. So with regular bills you should get advance warning of any alterations. This gives you time to tell your bank not to pay if you think the amount (or timing) is wrong.

There is also a money-back guarantee if any errors are made. You should simply have to tell the bank that a mistake has been made to ensure your account is re-credited (along with any consequential bank charges you may have incurred). Banks should not take sides between you and the organisation expecting payment. Instead, they should re-credit your account if asked and then sort things out.

On balance, the benefits of using direct debits probably outweigh the risk that things could go wrong. In any case, they are increasingly becoming the norm. The days of the cheque book and the standing order could be numbered.

Where can I find past performance records of personal pensions that include the effects of commission and charges?

RW, Cirencester.

Try Money Management - a monthly magazine available from many newsagents that produces surveys showing past performance after commission and charges. The surveys are published twice a year, usually in March and October. The magazine costs pounds 4.50, back issues cost pounds 7.50, and you can get photocopies of specific articles for pounds 5. Telephone 0171-896 2574 for details.

But as with all past performance figures, these will not tell you which will be the best pension for the future.

Nowadays, when you buy a personal pension, you should be given a projection showing how future performance may be affected by the company's current charges (these projections are also in Money Management's surveys). But these are standardised projections - all companies are required to use the same investment growth rate. The lowest chargers may not turn out to be the best if their investment performance proves poor. Of course you will not know at the outset how future investment returns will stack up.

Another problem is that your actual returns will also depend on what happens to charges in the future; these could change too.

What is the cost of BT Chargecard calls? Many parents give them to students to allow them to phone home, but I have an idea that they are expensive. Would it be cheaper to use your Chargecard to ring home and then get your parents to ring you back? JP, South Glamorgan

BT Chargecards allow you to use phones outside your home while having the cost of calls added to your own phone bill. Parents can get a card which allows sons and daughters calls home only, removing the worry that they could run up big bills elsewhere.

You can ask BT for a list setting out the cost of Chargecard calls. As a rule they cost twice as much as calls made from your home phone. However, this still works out about 5 per cent cheaper than calls made from public payphones. In view of the extra cost, it will often be cheaper for parents to ring back, especially for long calls.

Write to Steve Lodge, Personal Finance Editor, Readers' Lives, Independent on Sunday, One Canada Square, Canary Wharf, London E14 5DL, and include a telephone number. Do not enclose SAEs or documents that you want returned. We cannot give personal replies and cannot guarantee to answer every letter in Readers' Lives. We accept no legal responsibility for advice.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones