Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Authorizing automatic payments is a convenient option when making car payments online or ensuring your utility bills are paid on time. But what happens when things change? You might need to stop those recurring payments from processing, either because you’re no longer a customer of, or owe money to, the recipient.Knowing how to stop an automatic payment from a checking account in a timely manner can help you avoid overpayments or potentially overdrawing your account. Fortunately, if you need to halt automatic payments from a savings account, the process is relatively straightforward.
What Are Automatic Payments?
An automatic payment is a pre-authorized digital payment transaction that allows your creditor or servicer to draw funds from your checking account. You’d typically set up automatic payments through your service account by giving your creditor your bank account number and routing number to take payments routinely. Additionally, automatic payments can be set up with your financial institution through a process called “bill pay.” This is a similar process, but instead, you’re authorizing your bank to send payments to your creditor or other recipient.Bill pay through your bank is typically used for recurring bills that need payment on the same date each cycle. For example, you can set up auto-payments on a daily, weekly, bi-weekly, monthly, or annual basis. The auto-payment is for a specific amount you’ve set. If you created the continuous bill payment through your lender or provider, the payment amount might be your minimum payment due or full balance shown on your statement cycle — whichever you designate.
Automatic payments vs. automatic transfers
Automatic payments differ from automatic transfers. For example, upon opening a savings account, you might choose to schedule direct deposits or automatic transfers from your checking account into your savings account to grow your rainy day fund. This process adds money to your account balance, whereas automatic payments involves deducting money in checking account to pay for bills and debt.
Can Anyone but You Create Automatic Payments?
You are the only one who can authorize and create direct, automatic payments from your checking account. By law, consumers have the right to stop creditors or banks from drawing funds against their checking account, even if it was previously authorized.
4 Steps to Stop an Automatic Payment From Your Checking Account
Below is how to stop automatic payments from a checking account, starting with the simplest option to the most extreme.
1. Cancel automatic payment authorizations through the company
Log into your account with the company that’s receiving your payments. Go to the billing and payments section of your online account, and locate your checking account information. There should be an option to either pause automatic payments, or completely remove and unlink your checking information from your account.
If an online approach is unsuccessful, call the company to request that your bank information be removed.
2. Turn off automatic payments through your bank
If your continuous payments are set up through your bank’s bill pay feature, you can follow a similar process as above. Log into your bank account online, and find the option to manage your bill pay recipients or settings. From here, remove or pause the payment from your ongoing auto-pay schedule. If you need further assistance, contact your institution to have the automatic payments stopped.
3. Request a stop payment
If the creditor or company is still deducting the payment from your checking account, despite your requests to stop them, issue a “stop payment” request through your bank.A stop payment order tells the bank that you no longer authorize the auto-payment, and it should deny requests by the creditor to take funds. Banks commonly incur a fee for this type of request. It’s best to use stop payments as a temporary measure as you work on permanently stopping the automatic payments from occurring.
4. Close your bank account
A last resort, if necessary, is closing your checking account so the company no longer has access to your money. Before closing your account, ensure that all other authorized direct deposits, bill pay, and automatic payments are routed to a new active account. If you’ve had to take this extreme measure because a company ignored your request to stop auto-payments, consider filing a complaint with the Consumer Financial Protection Bureau (CFPB). It can help you resolve the issue with the company, or direct you to an agency that can help.
Can You Stop a Payment That Has Already Left the Account?
Payments that have cleared the account and have been received by the company can’t be stopped as it’s already taken place. If the payment wasn’t authorized, you can contact the merchant for a refund or dispute the charge through your bank. For example, if you officially canceled a gym membership and stopped your automatic payment but the gym still took payment, you can dispute the charge. Depending on your bank, filing a dispute for the unauthorized charge might require an investigation before receiving your money back.
Pros and Cons of Automatic Payments
Pros
Cons
Helps you avoid late payments and fees
It risks overdrafting and associated fees
Fewer individual bill payments to manage
Easy to forget what’s on auto-pay
Timely payments mean better credit
Less paper waste
It’s a secure payment method
Extra steps to reclaim overpayments
Common Auto-Payments
Some payments that you might have on auto-pay might include:
Mortgage installments
Car loan payments
Insurance coverage
Student loan payments
Cell phone bills
Household utility bills
Streaming subscriptions
Gym and wellness memberships
Childcare and tuition payments
The Takeaway
Most banks offer the convenience of managing your automatic bill pay online through its website. However, if you need help with stopping your auto-payments, you can also visit your local bank branch or call your institutions for assistance. If for any reason the payments continue despite trying to stop them, closing a bank account will stop automatic payments for good.Aside from managing automatic payments to your bank account, building up emergency savings is another part of a healthy financial picture. Compare savings accounts that offer high returns using Lantern. It’s a convenient way to see multiple high-yield savings options in your area so you find an account that’s right for your financial goals.Earn competitive returns on your savings.
Frequently Asked Questions
How do I turn off automatic recurring payments?
How do I cancel a continuous payment?
Can I call my bank to stop automatic payments?
Photo credit: iStock/PeopleImages
LCBK0223018
About the Author
Jennifer Calonia
Jennifer Calonia is a Los Angeles-based finance writer who has covered the gamut, including student loans, credit card rewards, consumer loans, and debt. Her work has been featured in outlets like Bankrate, NerdWallet, Business Insider, Yahoo Finance, and U.S. News.
