Setting up direct debits makes it easier to stay on top of your regular bills. Whether it's your gym membership, streaming subscription or energy and phone bills, automating the process is easier than manually paying your bill every month.
With credit card direct debits, you:
- Always make your payments on time.
- Avoid late fees.
- Don't have to worry about utilities or services being restricted for non-payment.
- Have reassurance that your savings account won't be overdrawn with a direct debit.
How to set up a regular payment via direct debit on your credit card
You can set up credit card direct debits for fixed amounts or to cover the exact amount you owe, even if it changes from bill to bill.
How you set it up will depend on your service provider. Some service providers will need you to fill out a form, while others may allow you to do it through their website or over the phone.
The details you'll have to provide include your credit card number, card expiry date and card verification number.
What to consider when setting up a direct debit
- Can you trust the provider that you're sending the direct debit to? Only set up direct debits from your credit card or debit card with services and providers that you can trust.
- Do you know how to cancel the direct debit? Make sure you know the steps you'll need to take to cancel the direct debit if you decide you don't need it or want to close the credit card.
- Can you repay the transaction made on your credit card? There's no point setting up a direct debit from your credit card unless you can afford to pay off the transaction in full each month. Otherwise, any unpaid amount will attract interest and you'll end up paying more than you need to.
Tip: Check your bank statements
When you set up a direct debit, it's easy to forget about the payment because it automatically comes out of your account. But its worth checking your credit card statement regularly so you know you're being billed correctly. As a bonus, it could help you find direct debits for services that you're no longer using (such as an old gym membership or TV streaming subscription service).
How to cancel a direct debit from your credit card
If you're closing your credit card, make sure you update your direct debit details to avoid any issues. Depending on your service provider, you may be able to cancel your direct debit over the phone or manage your payment options online.
Otherwise, you may need to contact your financial institution to cancel the direct debit and ask that it confirms the cancellation in writing.
Make sure you check your bank statement to confirm that the direct debits have been cancelled. If the recurring payments continue, follow up with your card issuer and the merchant to resolve the issue.
3 quick steps for changing your direct debit details
Each company that bills you will have different conditions for direct debits. Switching these payments to a new card is a DIY affair. You can keep the process simple by following these steps:
- Make a list of all the recurring payments set up on your card. Go through your card statements to see which companies you have direct debit arrangements with. Some may be easy to remember (hello, Netflix), but you may miss some. This could also prompt you to end subscriptions you don't use, helping you save money.
- Update your payment details with each service. Contact each service and update your account with the new credit card details. This can be done either online, through an app or over the phone. Delete old card details from your account. Make sure you also check that your card details have been added correctly. Some services may place an authorisation hold or "test" charge on your new account to confirm the details. The hold or charge is usually settled in a few days.
- Check processing times and your credit card statement. It may take a few days for some direct debit services to update your billing information. Make sure you know when your next payment is due and update your details in advance. That way, you avoid missing payments. You could also log on to your new credit card account and look for the charge in your recent transactions. This way you know for a fact the payment has gone through.
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