Stopping Automatic Payments from Bank Account

When cash is tight, payments that are automatically deducted from a consumer’s bank account may not be the most important bills to pay.  Instead the consumer may want to stop those payments and save the money for critical needs.  This information from the Consumer Financial Protection Bureau including sample letters which may prove helpful in stopping automatic payments.

Federal law provides certain protections for recurring automatic debit payments. You have the right to stop a company from taking automatic payments from your account, even if you previously allowed them. For example, you may decide to cancel your membership or service with the company, or you might decide to pay a different way.

If you decide you want to stop automatic debit payments from your account:

Step 1: Call and write the company

Tell the company that you are taking away your permission for the company to take automatic payments out of your bank account. This is called “revoking authorization.” Click here for a sample letter.

Step 2: Call and write your bank or credit union

Tell your bank that you have “revoked authorization” for the company to take automatic payments from your account. Click here for a sample letter. Some banks and credit unions may offer you an online form.

Step 3: Give your bank a “stop payment order”

Even if you have not revoked your authorization with the company, you can stop an automatic payment from being charged to your account by giving your bank a “stop payment order” . This instructs your bank to stop allowing the company to take payments from your account.Click here for a sample “stop payment order.”

Here’s how you can do a stop payment order:

1. To stop the next scheduled payment, give your bank the stop payment order at least three business days before the payment is scheduled. You can give the order in person, over the phone or in writing.
2. To stop future payments, you might have to send your bank the stop payment order in writing. If your bank asks for a written order,make sure to provide it within 14 days of your oral notification.
3. Be prepared to include a copy of your revocation to the company (see step 1) with your written stop-payment order.

Step 4: Monitor your accounts

Tell your bank or credit union right away if you see a payment that you did not allow (authorize) or a payment that was made after you revoked authorization. Federal law gives you the right to dispute and get your money back for any unauthorized transfers from your account, as long as you tell your bank in time. Click here for a sample letter.

Be aware that banks commonly charge a fee for executing a stop payment order. Further, cancelling your automatic payment does not cancel your contract with the company. If you want to cancel a contract for a service, like cable or a gym, be sure to cancel your contract with the company as well as telling it to stop automatic payments. If you cancel an automatic payment on a loan, you still have to make payments on that loan.

If you’re having a problem with a bank account or service or another financial product or service, you can submit a complaint to the CFPB online or by calling (855) 411-CFPB (2372).