How can I stop automatic payments from my bank account?

Automatic payments certainly simplify your financial life. You can reduce your risk of late payments and fees, and some lenders will even give you a discount for signing up for autopay.

However, the ease of autopay has a downside: You may end up paying for services you no longer use without even realizing it. In fact, a study from Self Financial found that people spend nearly $400 a year on unused subscriptions.

So, if you have several recurring payments and you’re ready to put an end to them, how do you stop automatic payments from your bank account?

With automatic payments, you allow a company (such as your Internet service provider, student loan servicer, or gym) to take money directly from your checking account on a specific date each month. For example, your utility company may automatically deduct $100 from your account on the 15th of each month to pay your bill.

There are several benefits to signing up for automatic payments:

• Avoid late fees: Missing a bill or loan payment often results in hefty late fees. By setting up automatic payments, you eliminate the risk of forgetting to make a payment and incurring unnecessary fees.

• Improve payment history: Since your history of making on-time payments on loans, credit cards, and other bills determines a large percentage of your credit score, enrolling in autopay allows you to build and improve your credit.

• Possible savings: Some lenders give borrowers an interest rate discount for signing up for automatic payments, usually 0.25% to 0.50%. Over the life of your loan, you can save hundreds of dollars thanks to this discount.

Despite the benefits of automatic payment, there may be times when you need to pause or cancel automatic payments. For example:

1. I decided to cancel the service: Whether you’re unhappy with your subscription or simply looking to cut costs and save money, you may decide to cancel a service or membership. For example, if you don’t use a particular streaming service, you can save $10-$25 per month by canceling that subscription.

2. You have closed your bank account: If you switch banks, you’ll need to end automatic payments from your original bank account and sign up for automatic payment using your new account details.

3. You have switched payment methods: Sometimes, using your bank account for automatic payments may not make sense. For example, if your credit card has a valuable rewards program, using your card may be a better option. Additionally, some credit cards offer statement credits for certain types of subscriptions, like streaming platforms or ride-sharing memberships, so using your credit card instead of your bank account can be a smart idea. If you need to switch payment methods, you’ll need to turn off automatic payment from your bank account and update your account with your credit card details.

Read more: How to Close a Bank Account: A Step-by-Step Guide

Whatever the reason for stopping automatic payments from your bank account, you can pause or end automatic payments using one of the following options:

1. Log in to your account and update your payment information

The simplest way to end your automatic payments is to log into your service provider account. Once logged in, visit the billing section and turn off automatic payments or update your payment details.

If you can’t cancel automatic payments online or are concerned it didn’t work, call your service provider’s customer service line. Explain that you want to stop automatic payments and request written or email confirmation that automatic payments have been stopped.

For added peace of mind, contact your bank or credit union and inform them that you have canceled your approval for automatic payments. They may have a form you need to complete, but you can use this Sample letter From the Consumer Financial Protection Bureau to get started.

Make sure your payment details are up to date to avoid missing payment and incurring late fees. It’s a good idea to review your bank and credit card statements to make sure the company followed your instructions.

If you requested to stop automatic payment but you’re still being charged, you may need to escalate the issue. You can File a complaint with the Federal Trade Commission And your State Attorney General.

No, closing a bank account does not terminate automatic payments. The service provider will continue to deduct funds from the account; If the account is closed, it means that payments will not be made, and missed payments will be reported to the major credit bureaus. In addition, you will likely incur late fees. To properly terminate automatic payments, you must contact your service provider directly.

Read more: Does closing a bank account hurt your credit score?

A stop payment order is different from simply canceling an automatic payment. It is an official request from a financial institution to cancel a payment or check before it is withdrawn on the account. This procedure can make sense if you are the victim of fraud or an unauthorized transaction and want to cancel the payment before the other party can receive it.

Read more: 7 Common Banking Scams and How to Avoid Them

If you cancel an automatic payment — and don’t set up new automatic payment details — you’re at risk of missing future payments. As a result, you could see your credit score drop. If you qualify for a discount thanks to automatic payment, you will lose this interest rate discount.

If you’re trying to control your subscriptions and memberships and want to reduce your spending, bill negotiation apps may be attractive. These services review your bank and credit card statements for you and identify recurring payments. In many cases, these services can also cancel recurring payments for you, if requested.

These apps can be convenient ways to save money, but there’s a catch: Depending on the platform, the service can take between 40% and 50% of the amount saved as a payment.