What happens to direct debits after you cancel a credit card?

saintmagician0 on 28/05/2017 - 11:21

I'm wondering, if you have direct debits on a credit card, and then you cancel that credit card… what happens when the merchant goes to charge you?

Every time I cancel a credit card, I get asked whether or not I have direct debits, and get told that I need to cancel any ongoing direct debits. I ask what happens if I don't… but they just tell me that I need to make sure they are cancelled.

So I'm wondering, has anyone here cancelled a credit card and forgotten to cancel direct debits? What happens? Does the charge just bounce and the merchant will contact you for updated credit card details? Or would the bank honor the request and then try and bill you?

Financial

Comments

  • KitchenSink on 28/05/2017 - 11:40

    Well for one I just know that you may be charged for late fees by the company/companies that are debiting you. So its always good to change that when cancelling cards. Merchants will contact you and say a charge cannot be completed and get in contact with them.

  • [Deactivated] on 28/05/2017 - 11:40
    -1

    The direct debit will be declined and you may have to pay a fee as well as updating your credit card details with the merchant. So lose lose if you don't cancel or update details…

  • [Deactivated] on 28/05/2017 - 11:47

    Also, getting merchants to stop direct debits can be difficult sometimes. ASIC has handy advice on best way to do this including sample letters here.

  • cell on 28/05/2017 - 12:48

    If you cancel a credit card and the merchant attempts to process the transaction using your old card details, it will be declined by the bank as its no longer valid. The reason why banks ask you if you have any direct debits is because by cancelling the card, it doesn't cancel any financial contract you have with the merchant. This means that if you legally owe some money, the merchant may then proceed to use a debt collection agency and recover funds from you in the future.

    • woteva on 29/05/2017 - 10:25

      My experience exactly. Kept getting bills for a cancelled credit card as the merchant kept stuffing up when I tried to update my details. The bank said they could not stop it and take it up with the merchant.

      Tried the banking ombudsman who also said I have to take it up with the merchant.

      I ended up cancelling the service from the merchant and signing up again with new card details to get it sorted.

  • Settero on 28/05/2017 - 13:02
    +1

    depends , you would be surprised how often they will honor it and send you the bill.
    closed card is very different to a card you report lost/stolen/fraud.

    i have seen direct debits be honored by the bank after a card is closed.

    im in no way saying that all banks work this way , but i know of at least one that often will, and its one of the big four.

    • airzone on 28/05/2017 - 13:25
      +1

      An invitation for a dispute.

      • Settero on 28/05/2017 - 13:37
        +1

        sure could i guess, but that is another topic.

  • MrMcHairyHead on 28/05/2017 - 14:39

    Does the charge just bounce and the merchant will contact you for updated credit card details?

    Yeah, the charge bounces. What the retailer does is gonna be up to them.

  • John Kimble on 28/05/2017 - 15:53
    +1

    It should decline, then most merchants charge you a dishonour fee.

  • retiredfeline on 28/05/2017 - 16:03

    Nothing good in any case.

  • [Deactivated] on 28/05/2017 - 17:39

    By Direct Debit I assume you mean ongoing authority to charge your card - they simply keep charging your card. I had this with Westpac - the account was closed, the card was cancelled and yet it was still being used. Westpac didn't give two hoots and couldn't explain why a closed account was still active. As I had previously approved the deduction it was not considered fraudulent by Westpac. My lesson from this is always close your account AND report your card lost or stolen, so that it cannot be charged. In my case I contacted the merchant, asked for a refund, which they processed without an issue. All this from the same bank who failed to write to me to tell me that my monthly fees had put by dormant cash account into negative numbers, but where happy to write to me every other week to offer me life insurance, superannuation, or some other product. When I queried this the bank staff said pay the bill, close the account and ask for a refund, as I don't have authority to process it here. So I did that. Then the bank manager said I cant refund because you have closed the account, but pop in anytime and I'll buy you a $34 coffee. What goes around comes around though - They are one of my clients and when they screw up I charge them penalties. When someone else screws up I am far more flexible.

  • Sensiekatie on 29/05/2017 - 08:37

    We have not been charged by ANZ. It has not been cards cancelled by us. Mostly new cards issued when previous expired. ANZ insisted on a new card when there were fraudulent transactions. They notified us of them before we even knew about them. House Insurance notified us card had failed but no extra fees.

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