A lot of businesses in America transfer funds electronically with a "pull" type of system. You give the business the bank account number of your account and they withdraw the funds. If the business does not offer this, then you need to send them the number on a piece of paper, such as a cheque.
This differs from European systems where businesses post incoming bank account numbers and customers "push" it from their banks to the business via a transfer form (which, if I recall correctly, you need to fill and deliver to the bank or post online, correct?)
Pull systems are THE WORST because you're putting 100% trust in the party you've given your account number to. I have multiple friends who have had various parties withdraw payments for loans in excess of what they were supposed to withdraw which put them in a serious financial predicament.
One in particular set all his bills up on auto-pay such that he didn't have to pay terribly close attention. His government-backed student loan payment took out something like 5x what it was supposed to and as a result he missed two months worth of payments (again because he didn't check regularly) and got quite a few other companies rather pissed off. And he had no recourse with the student loan folks.
After hearing about that kind of bullshit (I too am mostly setup for auto-pay) I got a second account with a totally separate bank which I occasionally deposit a few grand in for the companies that won't accept credit card payment for their services. This way even if one of them goes rogue and siphons the account dry they can't take me for more much more than is in the account. It doesn't protect me against someone going after my other accounts using judicial means, but it does provide a substantially higher barrier and gives me some peace of mind.
There are some other downsides to auto-debit, even when it's working 100%. Case in point: a woman was found dead in her home after six years. Her auto-debit kept the mortgage and all utilities paid...until the money ran out.
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A lot of businesses in America transfer funds electronically with a "pull" type of system. You give the business the bank account number of your account and they withdraw the funds. If the business does not offer this, then you need to send them the number on a piece of paper, such as a cheque.
This differs from European systems where businesses post incoming bank account numbers and customers "push" it from their banks to the business via a transfer form (which, if I recall correctly, you need to fill and deliver to the bank or post online, correct?)
Pull systems are THE WORST because you're putting 100% trust in the party you've given your account number to. I have multiple friends who have had various parties withdraw payments for loans in excess of what they were supposed to withdraw which put them in a serious financial predicament.
One in particular set all his bills up on auto-pay such that he didn't have to pay terribly close attention. His government-backed student loan payment took out something like 5x what it was supposed to and as a result he missed two months worth of payments (again because he didn't check regularly) and got quite a few other companies rather pissed off. And he had no recourse with the student loan folks.
After hearing about that kind of bullshit (I too am mostly setup for auto-pay) I got a second account with a totally separate bank which I occasionally deposit a few grand in for the companies that won't accept credit card payment for their services. This way even if one of them goes rogue and siphons the account dry they can't take me for more much more than is in the account. It doesn't protect me against someone going after my other accounts using judicial means, but it does provide a substantially higher barrier and gives me some peace of mind.
There are some other downsides to auto-debit, even when it's working 100%. Case in point: a woman was found dead in her home after six years. Her auto-debit kept the mortgage and all utilities paid...until the money ran out.
http://wnep.com/2014/03/07/auto-pay-bills-hide-womans-death-...
SEPA mandates are a pull system as well - at least in the Netherlands these are used for (monthly) subscriptions or down payments.
In the UK, if you have the sort code and account number you can push up to 100k GBP to that account in under 2mins via phone/web/mobile app banking.
The UK banking system is much smaller and has much better integration for interbank electronic transfers.
There's a great podcast about this issue here: http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...