How to cancel a direct debit payment on your credit card

Setting up a direct debit from your credit card can be a convenient way to keep on top of ongoing everyday payments such as phone bills or internet streaming subscriptions. However, if you'd rather have more control over how and when your payments are made, cancelling a direct debit isn't complicated.

How do I cancel a direct debit payment?

The steps to cancel a direct debit from a bank account and a credit card vary slightly, and to cancel an existing direct debit from your credit card, follow these simple steps:

1. Call, message or write a letter to the merchant (gym, charity, etc.) who has the direct debit authority asking it to cancel the arrangement.
2. Contact your issuer (bank, credit union, etc.) and inform them of the change or send a copy of this letter your credit card company.
3. Check with the financial institution in a few days to establish if it has cancelled the direct debit.

The Australian Code of Banking Practice states that banks should take prompt action in processing direct debit cancellation requests, and the Mutual Code of Banking Practice has a similar stipulation in place for credit unions and mutual building societies.

Why would I need to cancel a direct debit payment?

Direct debits can simplify how you make payments, but there are instances when you might want to put a stop to one or more direct debits. Some of the most common reasons to stop direct debits include the following:

• Change in income. There is a change in your income and you want more control over how you handle your expenses.
• Cancel a subscription. You want to cancel a subscription, for example, to a magazine, charity, online streaming service or gym membership.
• Moved house. You’ve moved to a new area and you want to stop direct debits to previous utility providers.
• Cancel a service you no longer want. You want to cancel a direct debit you signed up for in haste or unwittingly.

How to write a letter to cancel a direct debit payment

If you decide to write a letter or email to cancel your direct debit payment, you'll need to include the information of the direct debit and the account you're referring to.

Bear in mind that cancelling a direct debit in the middle of a contract term can come with repercussions and cancellation fees, so it’s best that you get legal advice in such a situation.

The letter given below should work only as a guide, and remember that you might have to make changes to suit your particular situation.

Sample letter for cancelling a direct debit on your credit card

When and what can I expect from the response?

Your credit card provider cannot legally refuse to honour your request for a direct debit cancellation. If your card provider refuses to cancel a direct debit, simply inform the representative you’re dealing with that clause 19.1 of the Code of Banking Practice requires the institution to, not just honour your request, but do it promptly. If your credit card provider does not cancel the direct debit, and if it makes further payments through the same direct debit, you can request for a reversal of funds. If you face problems at any stage, you can file a complaint with the institution’s internal dispute resolution team, and if this does not help you can move to the Credit Ombudsman Service or get advice from Consumer Action's public line.

What else should I be wary of when cancelling direct debits?

Cancelling a direct debit linked to your credit card is not particularly difficult, but there are some conditions to remember before you go ahead:

• Breach of contract. If the direct debit you wish to cancel comes linked to a product or service you’ve purchased in the past, and you’ve to keep making payments for a given time period, cancelling such a direct debit can lead to a breach of contract. You'll need to make sure you continue to make payments manually to avoid any legal consequences.
• Implementation of instructions. You instructing your credit card provider to cancel a direct debit is one thing, and it implementing your request is another. As a result, make sure you go through your credit card statements carefully and check if the debits in questions have stopped.
• Time limitations on chargebacks. If your credit card provider doesn't cancel a direct debit, contact it as soon as possible for a chargeback. This is because card providers have different time limits in place when it comes to processing chargebacks. Use our guide to understand how credit card charge backs work.

Cancelling a direct debit from a bank account or a credit card is not difficult. You still have to contact your credit card provider and instruct it to cancel the direct debit in question. Whether you do this over the phone or in writing, make sure you keep an eye on your account to ensure that your bank did indeed cancel the direct debit.

Frequently asked questions

• What should I do if I wish to cancel my credit card altogether?

  You would first have to pay your account’s outstanding balance in full, and then ask your credit card provider to cancel your account.

• Can I ask a service provider to pause a direct debit for a temporary period?

  Unfortunately, you cannot. You would have to cancel the direct debit and then restart it again.

• I noticed an unauthorised direct debit on my credit card statement. What should I do?

  You should get in touch with your credit card provider as soon as possible.