Once the automatic payment or direct debit is in place, it is worth checking your bank statements regularly, to make sure it is being processed as you intended.
Automatic payments.
An automatic payment is a regular payment you can arrange with your bank. You specify which bank account the payment will be made from, the amount to be paid, and how often the payment will be made (e.g. a specific date each month).
You would normally set up an automatic payment if the payment amount will always be the same, for example your rent payments.
If there is not enough money in your account to cover an automatic payment, then the payment will not proceed - and your bank may charge you a penalty fee - check its terms and conditions. You can amend or cancel an automatic payment at any time via online banking or by contacting your bank.
Direct debit.
A direct debit is where you sign an authority form, which gives an organisation the authorisation to deduct money from your account at regular intervals. Direct debits are a common way for people to make regular payments of varying amounts (for example, to pay your electricity bill if you are charged according to use rather than a fixed amount).
Many people do not realise that direct debit payments can be withdrawn from your account even when there is not enough money in the account. If this happens, the bank will probably charge you an overdraft or “honour” fee.
If, for some reason, the payment does not go through, the bank is likely to dishonour the payment and charge you a fee. It is extremely important to know that if you cancel the service that you are paying for via direct debit, you need to check that the direct debit is also cancelled. The service provider should do this for you, but if it doesn’t, you will need to.
To cancel a direct debit, tell your bank and the business. The best way to contact the business is via telephone and follow up with a letter. A template is available on the New Zealand Banking Association website. This is the best approach. Or, if it is local, you could visit the firm’s office.
Depending on who you bank with, you can tell your bank by:
• Sending it a message on internet banking;
• Calling it on the phone or;
• In person at the nearest branch.
Keep a record of when you tell the bank and the business in case there is a problem with your cancellation request.
Cancelling a direct debit does not cancel your contract with the business.
If you cancel a direct debit, you also need to either:
• Cancel the contract you have with the business (if you no longer want their services) or;
• Arrange to pay for the service in some other way that the business agrees to.
To cancel regular payments from a credit or debit card, tell the card provider.
Making regular payments for a service through your credit or debit card (for example, a subscription fee for an online service) is similar to a direct debit. To stop this payment, contact the card provider (for example, Visa or Mastercard) and the business.
What to do if the direct debit payments continue.
If you tell the right people to cancel your direct debit, but the money continues to be deducted from your account, contact your bank as soon as possible. It can investigate and reverse the payment (return the money to your account - called a chargeback).
If you are unhappy with your bank’s response, you can complain to the financial disputes resolution service it is a member of (most banks are members of the Banking Ombudsman Scheme).
I have had money removed from the bank by direct debit, but I have not signed any forms.
No one should debit money from your account without your authority (e.g., a signed direct debit form), and you can cancel a direct debit agreement at any time.
Companies can trade under different names, though, so you may have given a business the authority to take a direct debit and not recognise the trading name on your bank statement.
Under New Zealand law, a business or organisation that you have a direct debit agreement with has to let you know in advance the amount and date the payment from your account will occur, so if a direct debit has been taken without you being notified, you should contact the business and get it to send you your account statements.
If you are sure that you did not authorise a direct debit, ask your bank to show you a direct debit form with your signature as proof. If you did not authorise the debit, ask the bank to cancel it and help you find out who has been receiving the money.
If the direct debit transaction is unauthorised, the business should return the amount to you after your bank has completed a dispute investigation.
If you believe your bank has not resolved the matter appropriately, contact it again. If you’re still not satisfied with your bank’s response, you can make a complaint to the Banking Ombudsman.
Call: 0800 805 950 or email help@bankomb.org.nz For more information on cancelling a direct debit payment go to the link below. https://www.cab.org.nz/article/KB00001428
Anyone who wants to ask for advice can contact the Napier Citizens Advice Bureau in Bower House, Bower Street, Napier Monday to Friday 9.00 - 4.00 on 06 835 9664 or 0800 367 222 or send an email on napier@cab.org.nz. Confidentiality is always assured.
