Setting up a direct debit is easy. Cancelling one should be easy too, but many people get stuck because they contact the wrong place, or they cancel the payment and assume the whole service is cancelled as well. It is not. This guide walks you through the right steps, depending on whether the money comes out of your bank account or off your card.
Quick answer: If the payment comes from your bank account (using your BSB and account number), contact your bank and ask them to cancel it, then tell the service provider as well. If it comes off your debit or credit card, contact the service provider first, then your bank. Either way, get your request in writing and keep a copy. MoneySmart, the government money guide, explains the same process in short form on its direct debits page.
First, work out what kind of payment it is
This is the step most people skip, and it decides who you need to contact. Look at a recent bank statement and check how the payment is set up:
- Direct debit from a bank account: the provider withdraws money using your BSB and account number. Your bank can cancel this for you.
- Recurring payment from a card: the provider charges your debit or credit card using the card number, expiry date and security code. Your bank usually cannot cancel this on its own — the provider has to cancel it first.
If you are not sure which one it is, call your bank and ask. They can see how the payment is set up and tell you the right next step.
How to cancel a direct debit from your bank account
- Contact your bank. You can usually do this through internet banking or the banking app, by phone, or in a branch. Look for an option such as “cancel a direct debit” or send a secure message if your bank offers one.
- Say exactly what you want cancelled. Name the company, the account the debit comes from, and the date you want the payments to stop. If you have more than one payment to the same company, say which one you mean.
- Ask for written confirmation. Ask the bank to confirm your request in writing, by letter, email or secure message. Once your bank has your request, it has to stop the payments and pass your cancellation on to the provider’s bank.
- Tell the service provider as well. You do not strictly have to, but it is a smart move. Write or email them, say you have cancelled the direct debit, and keep a copy. This avoids confusion and arguments later.
- Check your next statement. Make sure the payment really has stopped. If another debit comes out, contact your bank straight away.
How to cancel a recurring payment from your card
- Contact the service provider first. This is the key difference. Tell them you are cancelling the recurring card payment, and ask for confirmation in writing. Do this in plenty of time before the next payment date — a few days at least, not the day before.
- Send a copy to your bank. Let your bank know you have cancelled the payment with the provider, and keep copies of everything you sent.
- Check your next card statement. If the charge appears again after you cancelled, contact your bank and ask them to dispute it. Show them the cancellation request you sent to the provider.
- Follow up. If the provider and the bank both point at each other, put your complaint to the bank in writing and keep a record of dates and names.
What cancelling the payment does not do
Cancelling a direct debit stops the money coming out. It does not cancel your contract or your subscription. If you still have a service agreement — a gym membership, a phone plan, an insurance policy — you still owe whatever the contract says, and you will need to pay another way or cancel the service itself.
That is why it pays to do two things at once: cancel the payment method, and separately cancel or change the service if you no longer want it. If paying by direct debit is a condition of the service, talk to the provider about another payment method before you cancel, so you do not end up in breach of the contract.
Watch the timing
If your next debit is only a day or two away, it may already be in the system and still go through even after you cancel. That does not mean your cancellation failed. Check the following statement as well, and if the payment after your cancellation date still goes out, raise it with your bank.
One protection worth knowing: if your account is debited after you asked your bank to cancel the direct debit, your bank cannot charge you overdraft fees to cover that debit. If that happens, point it out and ask for the fee to be reversed.
If the payments keep coming out
- Contact your bank again and refer to your original cancellation request and its date.
- Ask for the money back for any debits taken after the cancellation, along with any fees or interest that should not have been charged.
- Make a formal complaint to your bank if the problem is not fixed. Banks have internal complaints teams, and they must deal with your complaint.
- Go to the Australian Financial Complaints Authority (AFCA) if the bank does not fix it. AFCA is a free and independent service for complaints about banks and financial firms. Send them copies of your cancellation letters and any replies you received.
If money stress is part of the reason you are cancelling payments, free help is available from a financial counsellor through the National Debt Helpline on 1800 007 007.
A simple checklist before you cancel
- Work out whether it is a bank account debit or a card payment.
- Check whether you still have a contract or subscription to deal with separately.
- Cancel with the right party first — bank for account debits, provider for card payments.
- Get every request and confirmation in writing, and keep copies.
- Set up another way to pay for anything you still need, so you do not miss a bill.
- Check your next two statements to confirm the payments have stopped.
Common questions
Can my bank refuse to cancel a direct debit?
No. Once you ask your bank in writing to cancel a direct debit from your bank account, the bank has to act on it. If it does not, complain in writing and keep a record.
Do I need to contact both the bank and the provider?
For a bank account direct debit, contacting your bank is the part that stops the money. Contacting the provider as well is still wise, because it closes the loop and gives you a paper trail. For a card payment, contacting the provider first is essential.
Will cancelling a direct debit hurt my credit score?
Cancelling the payment method itself does not. But if you stop paying for a service you still owe money on, missed payments can cause problems. Always sort out the underlying bill or contract as well.
What if I want to pause payments instead of cancelling?
Ask your bank or provider whether a pause is possible. Some providers will let you suspend payments for a set period, and some banks can place a temporary stop on debits from one company. A pause is not the same as a cancellation, so get the terms in writing.
Cancelling a direct debit takes a few minutes once you know which kind of payment it is. Do it in writing, keep your copies, and check your statements afterwards — that paper trail is what protects you if anything goes wrong.
