What is a recurring payment? How do you set it up? And how do you stop it?
The answers to those questions, and more, are below. 👇
What is a Recurring Payment?
A recurring payment, sometimes called a recurring card payment, continuous payment authority (CPA), or referred to as AutoPay, is a regular payment taken from your bank or credit card in exchange for a frequently used product or service.
This type of payment is often used for:
- Website subscriptions
- Streaming service subscriptions
- Subscription boxes
- Gym memberships
- Payday loan repayments
How do I make Recurring Payments?
In order to set up a recurring payment, you need to provide the company or organisation with one-time permission upfront. They then take your long card number (as opposed to your bank account number and sort code) to deduct the money owed from your account or credit card.
It’s important to note that a recurring payment is NOT the same as a Direct Debit.
With recurring payments, you are effectively granting permission to have money taken from your account whenever the company believes it is owed. And that’s not the only difference.
Recurring Payments vs Direct Debit: Spot the difference
Direct Debit meaning:
- You authorise a company or organisation to take money from your bank account for a fixed or variable amount by providing them with your sort code and account number.
- You can cancel a Direct Debit at any time by contacting your bank.
- You’re protected by the Direct Debit Guarantee, which means if money is taken in error, you can receive a full and immediate refund from your bank.
Recurring Payment Meaning:
- You provide a company or organisation with your credit or debit card details, rather than your bank account details.
- Although you have the legal right to cancel a recurring payment, it can be far more difficult than cancelling a Direct Debit.
- Unlike Direct Debit payments, you’re not protected by a guarantee. If a payment is taken in error, it can be time-consuming to secure a refund.
How do I stop Recurring Payments?
Unlike Direct Debits, which are listed as such in most banking apps, recurring payments can sometimes slip under the radar. To stop a recurring payment, first, you need to find it.
Don your deerstalker and pore over your bank statements. If you see a regular payment being taken from your account that isn’t listed as a Direct Debit or a Standing Order, then it’s a recurring payment. Likewise, any regular payment coming off of your credit card is by definition a recurring payment, as you can’t pay by Direct Debit with a credit card.bb
Now you have two options to putting a stop to these payments:
- Cancel directly with the company: The obvious place to start. You may need to pick up the phone and speak with a customer service rep to get this done, but more often than not it’s a simple case of logging into your account on a company’s website and clicking cancel.
One word of warning, however: If you’ve signed a contract with a company for a product or service (like a gym membership or a 12-month subscription to a magazine) you may need to give notice of your intention to leave, or they may enforce the contract. Read the fine print carefully!
- If the company plays hardball, ask your bank or credit card to cancel the payment: According to the Financial Conduct Authority, it is your right to cancel recurring payments — and banks and card issuers MUST cancel if you ask. If they fail to do so, you can pursue a complaint with the Financial Ombudsman Service.
Control your spending with Revolut
Recurring payments can run amok if you forget about them — especially if you’re in the habit of clearing your credit card without reviewing each charge.
For better visibility of your spending, use Revolut. Where possible, switch recurring payments to Direct Debits (we now support UK Direct Debit payments). And for any other regular payments, you can categorise them, giving you complete control over your outgoings.
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