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How to set up direct debits on your credit card
Never miss a bill and manage your ongoing expenses by setting up direct debits from your credit card.
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Direct debits can make it easier to stay on top of your regular expenses. This might include your gym membership, streaming subscriptions and utility bills. Not only is it easier than manually paying your bills each month, but it'll help you make your payments on time. You can set up direct debits for fixed amounts or a variable amount, where the merchant will deduct the exact amount owing from your account.
Use this guide to learn how to set up direct debits from your credit card account.
How to set up a regular payment on your credit card
The exact process will vary depending on your credit card issuer, but you can usually set up direct debits from your credit card by contacting your provider or merchant (such as your telco provider) on the phone. When you're setting up or managing your account online, you may also be able to list your credit card details as your preferred payment option. Your payments will then automatically be deducted from your account when your bill is due.
What to consider when setting up a direct debit
Before you set up a direct debit from your credit card, ask yourself the following questions:
- 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.
Make sure to check your bank statements
When you set up a direct debit, it's easy to forget about the payment as it's deducted from your account. To make sure you're being billed correctly and that the payments are being deducted on time, check your credit card statement regularly. When you're checking your statement, you may identify 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 to set up direct debits from another card to make sure you're still paying your bills on time. Depending on your service provider, you may be able to cancel your direct debit over the phone or by managing your payment option through your online account.
Otherwise, you may need to contact your financial institution to cancel the direct debit and ask that they confirm the cancellation in writing. If you're required to cancel it in writing, you can check out Finder's sample letter for cancelling a direct debit for a template that you can use.
Make sure to 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.
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Hi! 3yrs back I set-up a direct debit for a service. Though I attended the service, I was never really happy with the service and don’t really want to pay for it. The company also stopped contacting me regards to this matter.
Even though, the company is a 1 person operated (pretty small) and also because I don’t wish to pay for it. Can they still affect me in any negative ways?
John.
Hi John,
Thanks for your question.
All your credit applications, payment defaults, credit enquiries, payment histories and even bankruptcy information are all listed on your credit file. So, if you have not paid your debts for whatsoever reason, it will be recorded on that file and that may have a negative effect on your rating.
Usually, when you apply for any form of credit, the creditor will conduct an enquiry of your file. Whatever information they find from your file will most likely be considered in their decision whether to approve your application or not.
If you wish to check your credit file, you have the option of signing up for a credit monitoring service or buying a one-off credit report.
Cheers,
May
Are direct debits on credit cards considered purchases or cash advances for the purpose of interest charges?
Hi Lourie, thanks for your inquiry!
Generally direct debits are associated with bill payments and recurring cash advance transactions. The quickest method to determine whether your direct debit transaction is a purchase is to contact the merchant directly.
Cheers,
Jonathan
I would like to set up a direct debit for a credit card as we will have a large amount of spending for the next six months but these payments may put us into credit on the card. Is this allowed?
Hi Trevhse,
Thanks for your inquiry,
Direct debit payments via a credit card are possible if the merchant supports direct debit facility. Depending on the credit card lender the interest rate will vary for the direct debit transaction.
I hope this helps,
Jonathan
I have been on the phone and have spoke to 8 different people from St George this week regarding the interest charges on my vertigo mastercard. Every single one of them said that I will be paying interest if I have not paid the closing balance. This is not what I was told when signing up for the card, and it is not what is stipulated on your website. I always make the minimum payment, going over it by about $300 per fortnight. I don’t know if the interest charges are from my gym membership which has been coming out of the credit card. I was never warned about this type of transaction and the fees that it would accrue.
Furthermore, I have not received any phone calls from St George to say what the charges are from, which I would expect if it is a $22 membership, which I get charged $27 extra for. Not one of the customer service representatives could give me helpful information. I have their names, and I know which departments they work in if this is of any help.
What should I do?
Hi Kate,
Thanks for your question.
Interest will be applied on your St.George Vertigo card unless you pay the closing balance in full each statement period. If you’re unsure which transactions are costing you interest, it can help to take a look at your most recent statement and see the interest charges that are applied to your account. Any purchases you make will have the purchase rate of interest applied, while cash advances (which St.George defines as withdrawing cash using your card or transferring to and from other accounts you have with St.George) will have the cash advance rate applied.
As for the $27 additional charge, this is something that you will need to sort out with St.George. You might want to take a look at this page that details the process of revolving disputes with your card issuer.
I hope this has helped.
Thanks,
Elizabeth
Hi, I have just switched bank accounts which seemed to go ok …until now. I received a default letter from my credit card saying I was in arrears and missed my payment. When I called they said I cancelled it on a given date and advised me to contact my bank, which I did and they say the switch was ok and the direct debit is showing as live on their system. Who is at fault to reclaim costs from and how do I prove this as I have made several phone calls and they both say it isn’t their fault. Surely I must be able to get proof somewhere, after looking at my bank account it does show as active on the screen ???? Confused! Please help or advice :)
Hi Jjaymags,
Thanks for your question.
You might want to call your credit card issuer to confirm what the problem is. If you’ve set up direct debit with your credit card, it could be that the numbers on the form were incorrect.
Your credit card issuer should be able to provide a course of action; alternatively you could contact the Financial Services Ombudsman as both banks seem like they are unable to help.
Cheers,
Shirley
I’ve changed banks recently. I’m in the process of changing all my direct debits to new bank. Is it worth having DD from my credit card account? Mainly to earn more points? Phone, power, water, gas etc etc etc.
Kind regards
Wozz
Hi Wozz.
This depends on whether you want to earn points. If you’re paying the bills on your credit card, then you may as well get rewarded when you spend. You can find out more about paying bills and earning points on this page.
Thanks for your question.
If say, an insurance company debits visa credit card monthly, lets say, 20th of the month, do they put a bar/restriction for that amount a few working days before? to ensure they get their funds? Just wonder since sometimesI have no reason for a debit balance, but know there is a bill due in next few days.
Thanks.
Hi Natalie. Thanks for your question. Yes, some merchants do this, it depends on how the merchant bills your account. Jacob.