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Direct debits can be useful for ensuring you pay your bills on time. However, sometimes they work against you.

Jack set up a direct debit to pay his GST. On the 28th of the month he checked and could not see a payment to IRD. He was concerned because he knew the money had to be in the IRD bank account and it was not enough for it to be in transit. So, he made an internet transfer.

Next day IRD put through a direct debit to his bank account, which was backdated to the 28th of month. Unfortunately, they put through the debit twice. This meant he had paid his tax three times and he had to contact the Department to get a couple of the payments back. They were returned quickly but not quickly enough to prevent the bank charging a dishonour fee.

Direct debit is very useful but you lose control of your payments when you use it.