Direct debits on your credit card: how to set up, change or cancel

Protect your credit score by never missing a bill and manage your ongoing expenses with 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 to cover the exact amount you owe, even if it changes from bill to bill.

How to set up a regular payment via direct debit on your credit card

Usually, you'll just need to fill in a direct debit or payment form and include detail of the card you want to use for recurring payments.

If you're setting up an account online, this could be part of the "billing" section. If not, you may need to ask the merchant (such as your telco provider), or call them directly to set up the payment. 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 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 by manage your payment options online.

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 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.

6 quick steps for changing your direct debit details

Each company that bills you will have different conditions around direct debits and recurring payments, so switching all of these payments over to a new credit card is a DIY affair. But you can keep the process as simple as possible by using the steps below.

1. Make a list of all the recurring payments set up on your card. Go through your card statements to see which companies you have recurring payments with. While some might be easy to remember (hello, Netflix), this step will make sure you don't miss any others. As an added benefit, this step could prompt you to get rid of any subscriptions you don't really use, which could help you save money on your everyday expenses.

2. Update your payment details with each service. Contact each service and update your account with the new credit card details. You can usually do this either online, through an app or over the phone.

3. Check processing times to ensure there are no missed payments. It may take a few days for some direct debit services to update your billing information. So, make sure you know when your next payment is due and aim to update your details well before that. If your account has already been cancelled, call the company and let it know the direct debit won't work. You'll then be able to update your details or make a one-off payment to avoid issues or fees that could come from missed payments.

4. Confirm the details have been updated. Check your direct debit account to make sure your new card details have been added correctly. Some services may also place an authorisation hold or "test" charge on your new account to confirm the details. When that's the case, the hold or charge is usually settled in a few days.

5. Delete old card details from your account/s. If you can still see the old card details are stored on your profile with a particular business or service, delete them to avoid any confusion or issues in the future.

6. Make sure the next payment goes through. When your next payment is due, log on to your new credit card account and look for the charge in your recent transactions. Once you see it there, you're good to go.

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14 Responses

    Default Gravatar
    JohnJanuary 4, 2017

    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.

      Avatarfinder Customer Care
      MayJanuary 4, 2017Staff

      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, they 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 inquiry 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

    Default Gravatar
    LourieSeptember 18, 2015

    Are direct debits on credit cards considered purchases or cash advances for the purpose of interest charges?

      Avatarfinder Customer Care
      JonathanSeptember 18, 2015Staff

      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

    Default Gravatar
    TrevhseJanuary 27, 2015

    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?

      Avatarfinder Customer Care
      JonathanJanuary 27, 2015Staff

      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

    Default Gravatar
    KateDecember 21, 2014

    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?

      Avatarfinder Customer Care
      ElizabethDecember 22, 2014Staff

      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 the details of the process of resolving disputes with your card issuer.

      I hope this has helped.

      Thanks,

      Elizabeth

    Default Gravatar
    JjaymagsJuly 9, 2014

    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 :)

      Avatarfinder Customer Care
      ShirleyJuly 10, 2014Staff

      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

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