Ins and outs of direct debits

More and more merchants offer incentives if you pay via direct debit. We tell you how to avoid the pitfalls.
 
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02.Cancelling a direct debit

How do you go about cancelling a bank account direct debit?

You can cancel a direct debit linked to a normal account by giving your financial institution and/or the merchant a letter (better to let both know).

  • Put the cancellation request in writing and keep a copy of the request.
  • If you cancel through the merchant, it may take several days to come into effect.
  • If you cancel through your financial institution, it might work out simpler and quicker as it probably can be done using a special form. You might be told you have to do it through the merchant but you're entitled to cancel through your bank (you might be charged a fee).

What if the direct debit is from your credit card?

 Cancelling a direct debit on your credit card account is more difficult.

  • Cancel in writing with the merchant and give a copy to your financial institution.
  • If the merchant fails to act on the cancellation request, you can dispute all subsequent charges with your financial institution.

Usually the financial institution will give you a "chargeback" while it investigates (the amount is credited back to your account). If it finds in your favour, no further action will be taken. If it finds in favour of the merchant, the original direct debit amount will be deducted from your account.

Dealing with disputes

If you're not satisfied with the actions of your financial institution, complain to its head office. If that doesn't work, an external dispute resolution scheme may be able to help:

  • Banking and Financial Services Ombudsman (BFSO), phone 1300 78 08 08, www.bfso.org.au
  • Credit Union Dispute Resolution Centre (CUDRC), phone 1300 78 08 08, www.cudrc.com.au.

 

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