What are the Different Ways to Pay Money?

Last Updated
July 27, 2010


The following will outline the different methods of payment where a bank would be involved.

In this article, we refer to a ‘creditor’ as a ‘person/institution that you wish to make a payment to’.


You can pay a creditor with cash (notes and coins) which can exchange hands immediately.


Cheques can be issued to the creditor which is usually accompanied by a cheque guarantee card.

For large amounts, this can be the most secure method of payment compared to exchanging cash. Cheques can also be used to send payment via post conveniently.

It is common for your account to be debited within five working days after the creditor deposits the cheque into their bank account.

  1. A cheque is written (made payable to the creditor) and signed by you
  2. The creditor deposits the cheque at their bank
  3. After routine checks, the amount is debited from your bank account (within 5 working days)

Switch Card (or Other ‘Debit’ Card)

Switch is an electronic payment that is accepted by most retailers throughout the UK. In most cases, the payment will be debited from your account on the same day, where occasionally it can take up to two working days for the amount to be debited. You will not get charged to use your switch card unless your bank account does not have enough money to pay the full amount. In addition, there is usually no limit on the amount you can spend with your switch card (unless stated by the creditor’s policy). Switch is a common method of payment and is usually regarded as a good (and safer) substitute to carrying cash. The creditor swipes your switch card through a machine You sign to confirm the transaction The amount is debited from your bank account within 2 working days

Credit Cards

There are several companies (Visa, MasterCard, Capital One, etc) that offer credit to people with varying interest rates. The repayments are usually paid back in instalments on a monthly basis until the credit is paid off: the credit company will set a minimum payment each month. Interest is usually calculated on a monthly basis on the outstanding amount owed. Failure to make a monthly repayment will incur extra charges (in addition to a poor credit record with the company). You c an p ay the credit company using a variety of methods – direct debit from your bank account, postal order or cheque are the main methods that credit companies usually prefer.

  1. The creditor swipes your credit card through a machine
  2. You sign to confirm the transaction
  3. The credit company send you a monthly statement
  4. You send a valid form of payment (at least the minimum payment) to the credit card company

Standing Order

A standing order is a request to your bank to make fixed regular payments (weekly, monthly, etc) from your bank account to a creditor’s bank account – should this be within the same bank or another bank. Your bank will then make sure that the payment will be regularly debited from your account as you requested until you cancel the standing order. For example, you could set up a standing order to debit your account £100 on the 1st of every month to be paid into the creditor’s bank account (until the full amount is paid). A standing order will prevent the need for regular cheque writing and give you the peace of mind that you will not miss a payment deadline (if this is the case). It does not cost anything to set up or cancel a standing order.

  1. You set up a standing order with your bank
  2. The amount is regularly debited (as you requested) from your bank account
  3. The amount will continue to be regularly debited until you cancel the standing order

Direct Debit

A creditor, with your permission, can set up a direct debit with your bank which will debit money from your account directly into theirs on request. This can be used for one-off payments (such as an on-line shopping purchase) but perhaps most common with regular payments such as paying off a loan. Direct debits are also popular for regular payments where the amounts change each month (or week, etc), for example mobile phone bills. Creditors usually prefer this method when it involves regular payments as they are comforted by the guarantee of being paid each month (or week, etc): given that you have enough money in your account.

  1. You give your bank account details to the creditor
  2. The creditor contacts your bank to and confirms your agreement of a direct debit
  3. The creditor requests the money from your bank account
  4. The amount is immediately debited from your account

On the next page we look at BACS payments, bankers drafts, Internet banking, telephone banking and TV banking…

Article Index

  1. What are the Different Ways to Pay Money – Cash, Cheque, Cards, Direct Debit
  2. BACS Bankers Draft Internet Banking TV Telephone Banking
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