cancel a direct debit

A direct debit is when you allow someone to take money from your bank account on a regular basis to pay for something. Payments on credit cards can also be made by direct debit.

Direct debits can be a convenient payment method. But if you’re in financial hardship, you need to pay your priority debts first, which may mean cancelling some or all of your direct debits to help you manage your money.

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Cancelling direct debits

You should cancel your direct debit when:

  • you can’t afford the payments and the merchant will not change the amount to an affordable one. Make sure you do keep making the payments you can afford using a different payment method.
  • you’ve cancelled your agreement with the merchant for any reason
  • you want to change your payment method – for example, from direct debit to payment by BPay, cheque or other
  • you’re in dispute with the merchant as to the amount of a bill or the quality of the goods or service. Once the direct debit has been cancelled, you should still pay any amount you agree you owe

You have the right to cancel direct debits – even if your bank tells you that you can’t. It’s your money and it’s your bank account. It’s also useful to know that businesses that offer direct debit payments must have a process to help you cancel your direct debit arrangement.  Follow the steps below to cancel a direct debit.

Steps to take to cancel a direct debit

01

Tell your bank to cancel your direct debit

You can tell your bank to cancel the direct debit in a number of ways:

  1. Call them
  2. Drop into the branch
  3. Send the bank an email
  4. Do it online at the bank’s website (if available)

Whatever way you use, make sure you keep details of when and how you cancelled. If you sent an email keep a copy of the email. If you told the bank, make a note.

You can make the cancellation immediate or set a future date for cancellation.

Once your bank has been told to cancel the direct debit, they’re obliged to make sure no more payments are debited from your account.

Note that there’s a slightly different cancellation procedure depending on whether your direct debit is from a:

Cheque or savings account

If your direct debit is from a cheque or savings account, then the bank must cancel your direct debit when you tell them. There’s no need for you to contact the business you’re paying (Step 2).

Credit card or MasterCard or Visa Debit card

If your direct debit is from a credit card or MasterCard or Visa Debit Card, then you must notify the business you’re paying, in writing, before or at the same time as you notify the bank. (See Step 2.)

RESOURCE

Use this letter template (Word 221kb) to request a direct debit cancellation from your bank.

Use this letter template to request a direct debit cancellation with the merchant.

02

Tell the business getting paid by direct debit that you want to cancel it

If you are cancelling a direct debit for your credit card, MasterCard or Visa debit card, you must tell the business that you no longer want to pay by direct debit. (This is so you can then tell the bank that you no longer agree to the direct debit.)

Even if your direct debit is from your savings or cheque account it can make things quicker and easier if you tell the business that you want to cancel it.

As with Step 1, it is important to keep notes or an email to prove your cancellation. For this step, it is better to send your request in writing (letter or email).

If the business wants to discuss alternate payment methods with you based on what you can afford, refer to Negotiate payment terms for tips on what to ask for.

RESOURCE

Use this letter template (Word 220kb) to request a direct debit cancellation from the business or trader.

03

Call the bank to make sure the direct debit has been cancelled

Call the bank to check that the direct debit has been cancelled a few days after you send the letter.

If it hasn’t been cancelled, you can make a complaint to the bank. If they don’t resolve the complaint within 45 days, make a complaint the free dispute resolution scheme – Australian Financial Complaints Authority. The details of the complaint should be the same as in the letter of complaint to the financial institution.

More about External Dispute Resolution.

04

Speak to one of our financial counsellors

If you’re feeling overwhelmed and need some help to deal with your financial hardship, you can speak with one of our financial counsellors.

Financial counsellors aren’t judgmental about your circumstances – they’re here to offer you free, confidential and independent advice and assistance.

To speak to a financial counsellor you can:

  • Call the National Debt Helpline on 1800 007 007 – open Weekdays from 9:30 am to 4:30 pm.
  • Use our live chat service by clicking the chat icon in the bottom right corner of your screen. Live chat is available 9:00 am to 8.00 pm weekdays. If you send a message outside these hours a financial counsellor will get back to you.
  • Make an appointment to see a financial counsellor in your local area – Find a local Financial Counsellor.
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Before setting up a direct debit

  • Make sure you trust the business you’re paying by direct debit. After all, you’re allowing them to take money from your account
  • Ask about other payment options that may suit you better
  • Only set up direct debits if you can afford the payment. Get advice if you cannot afford your contractual payments
  • If you set one up, keep an eye on it to make sure the right amount is being taken
  • Keep copies of all letters you write or receive, and statements
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You might feel overwhelmed, but you have options and there are steps you can take yourself. But if you feel you need a bit more guidance or need help quickly, simply call us.

CALL 1800 007 007
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