Now more than ever, it’s a good idea to keep on top of your bank balance. However, many people struggle to understand the payment types that leave their accounts automatically. There are primarily three types of payments that debit funds from your bank account. Here, we will help you understand how they are set up and how you can cancel them.
Payment Types To Be Aware Of
Direct Debits are a common way to pay automatically for utilities and services. You set up a direct debit agreement to pay regular payments for a set period of time. Or until the agreement is cancelled. Amounts are collected via your bank account on the day they are due. The provider sets up this arrangement with your bank for agreed payments to be paid.
The provider controls the amount collected. You have direct debit guarantee protection. Therefore, if the bank or holder of the direct debit instruction makes a mistake or doesn’t give you the required notice of a change in amounts, the bank must refund you. To cancel, you should notify the company the arrangement is with. You can then cancel the instruction with your bank once all amounts you agreed to have been collected.
You set up a standing order by giving your bank instructions to make payments to a recipient’s bank account. You’ll pay the amount required at intervals you set. You can make payments for a set period or until further notice, and you can change amounts or cancel arrangements directly with your bank if required.
Continuous payment authorities (CPA)
CPAs are a common method of payment arrangement for subscription services such as magazines etc. A continuous payment authority will debit your bank or credit card account using your debit/credit card details. A business will set up a recurring payment request to enable them to take payments when they are due. You should contact the company receiving the CPA payments or the card provider to cancel your payments.
Before signing any agreement or signing up for ‘free trial’ offers, be sure you understand what you are signing up for. Many free trials require a bank account or card number to allow you to participate, so be sure you either cancel the agreement within the free trial period or understand how you will be charged after the end of the period.
If you sign up for a direct debit, keep an eye on the amounts collected and for any emails or letters advising you of a change to the amount to be collected. You should receive a minimum of 10 working days’ notice if the direct debit mandate holder changes the collection amount. For standing orders, you control the amount and frequency, so it’s essential to ensure you act in time to make necessary changes.
Now that you understand how you can control those automatic payment types that raid your bank account, you can keep a better check on your finances and budgeting.