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Why should you avoid automatic bill payments?

Sometimes, auto payments which are linked to the credit card can be a great nuisance. It is possible to set up auto payments for almost anything, from gym fees to cable bills. It is one of the ways in which vendors can be assured of timely payment of bills.

It is however important to note that such auto payments linked to the credit card can be the cause rapid drain of available credit/money. In some cases, vendors may keep charging despite the membership being cancelled. It can get real inconvenient when the service provider deducting the money does not reply to your cancellation request.

How auto bill payments can become really complicated

People give permission to companies to take money from their credit card on a regular basis. The vendors can be anyone, ranging from the gym to payday loan lenders to newspaper/magazine subscriptions. These vendors often tend to charge the card whenever they want to.

In some instances it can be really hard to contact certain vendors. One must however remember that all of us have the legal right of cancelling auto payments. It is mandatory for banks to cancel auto payments when there is no co-operation or response from companies. Cancellation of automatic bill payments is not that difficult when the vendor is a reputable, well-known service provider.

Some of the disadvantages of auto bill payments are listed below:

  • Credit card holders need to put in excess effort to stop auto payments
  • There is unnecessary and frivolous spending
  • Vendors make it difficult to cancel
  • Result debt on credit card can quickly become unaffordable
  • It can become bothersome when there is a change of accounts

Cancelling auto bill payments

Listed below are the different ways in which consumers can stop or cancel automatic payments.

  • Get the bank or the credit card company to stop the payment. It is mandated by the Financial Conduct Authority that credit providers have to cancel when requested. Future charges on the card have to be refunded by the banks to the consumer.
  • Contact the vendor and get the auto payment cancelled. It can be done by calling the company or via email. It is the best and the easiest option to cancel automatic payments of bills.
  • It is recommended that consumers follow up a phone call with a written request for cancellation. This can act as evidence of the request for stopping auto payments. It may however be noted that the phone call is sufficient instruction for cancellation. Consumers should note down the time and date of the phone call for record keeping.

Precautions to be taken with regards to auto payments

  • Ensure that the vendor is reputable and legitimate. Do not opt for auto payments unless you are sure of the credibility of the company.
  • Ensure that there are sufficient funds in the credit card when auto payment is due. Else it can result in overdraft charges by the credit card provider as well as fees by the vendor. Such charges can quick add up and become unaffordable
  • Be aware of your rights. It is not mandatory for consumers to give permission for auto payments, unless it is for an overdraft line of credit. Do not do business with companies that exert pressure on you for auto payments.
  • Read the agreement and make sure that you understand the terms of the auto payment contract. Make sure that you are aware about the frequency of auto payment and the amount that will be charged.

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