How to transfer direct debits to a new credit card
If you’re switching credit cards or have one that’s just expired, here’s how to update your direct debit details to avoid penalty charges and other issues.
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Your debit or credit card can be a convenient way to "set and forget" recurring payments for services, like private health insurance or your Internet bill. But these payments won't be processed if your card is cancelled or expired, which could lead to fees from your card provider and the business you're supposed to be paying. In some cases, you could find your account suspended or cancelled for falling behind on payments (even when it's an accident).
So what happens if you need to update your card details before a payment is due? Let's take a look at the steps you can take to make sure all your subscriptions are switched over to your new account.
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 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.
What's the difference between direct debits and recurring payments?
Technically, direct debits are deducted straight from your account. This means they are usually only applied to savings or transactions accounts. Recurring payments, on the other hand, are any regular, ongoing charges made on your account, including debit or credit card accounts.
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What else do I need to consider?
If you're using a credit card for direct debits and want to move them to a new card, make sure you consider the following details:
- Surcharges. Some companies may apply a surcharge for recurring credit card payments. For example, Ezidebit, which manages direct debit payments for some gyms, charges 2.15–4% for card transactions. If your gym (or a personal trainer), used this service, it could pass that cost on to you. So make sure you find out about fees for cards and consider alternative payment methods that have lower or no fees (such as a direct debit from your bank account).
- Processing time. It could take several business days for billing companies to update your direct debit payment details. To avoid payment issues and potential fees, check when the next payment is due before updating your details and plan around it.
- Payment issues. As direct debits are automated, there can sometimes be payment errors. So, check your credit card statement to make sure the next payment goes through. If your old account is still active, you should also check it to make sure you're not charged twice.
- Cancelling direct debits. If you want to stop these payments completely, contact the business that's billing you and ask for it to cancel your direct debit or recurring payment plan. Depending on how the payment is set up, you may also need to contact your credit card company and request that it cancels the payments. Check out this guide for tips and steps you can take to stop direct debits completely.
If you're consolidating your debts with a balance transfer card and plan to use it for direct debits, you'll also need to think about the following factors:
- Cancelling your old credit card. If a direct debit is charged to your old card after the balance has been transferred, you will need to pay it off before you can close the account.
- Balance transfers and new credit card charges. Any direct debits you add to a balance transfer credit card will not be eligible for the balance transfer rate. This means they will attract interest straight away, so make sure you factor that into your repayments.
While it's easy to overlook recurring payments when they're automatically taken from your credit card or account, you'll definitely notice the extra fees and hassles that can come from failed payments. So, when you're planning to cancel a card or have one that's expired, going through these steps will help keep things running smoothly.Back to top
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