Automatic payments certainly simplify your financial life. You can reduce the risk of late payments and fees, and some lenders even give you a discount for signing up to autopay.
However, the convenience of automatic payments has a downside: You could end up paying for services you no longer use without realizing it. In fact, a study by Self Financial found that people spend nearly $400 a year on unused subscriptions.
So, if you have several recurring payments that you're ready to end, how can you stop automatic payments from your bank account?
With automatic payments, you authorize a company (such as an internet 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 withdraw $100 from your account on the 15th of each month to pay your bill.
Signing up for automatic payments has a number of benefits:
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Avoid late fees: Missing a bill or loan payment often results in very late fees. By setting up automatic payments, you eliminate the risk of forgetting to make a payment and incurring unnecessary fees.
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Improve payment history: Since your history of making on-time payments towards loans, credit cards and other bills determines a large percentage of your credit score, signing up for autopay allows you to establish and improve your credit.
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Potential 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 could save hundreds of dollars thanks to that discount.
Despite the benefits of autopay, there may be times when you need to pause or cancel automatic payments. For example:
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You decide to cancel a service: Whether you are unhappy with a subscription or want 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 could save anywhere from $10 to $25 per month by canceling that subscription.
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You have closed your bank account: If you changed banks, you'll need to end automatic payments from the original bank account and enroll in automatic payments with your new account details.
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You have changed 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 choice. Also, some credit cards offer statement credits for certain types of subscriptions, such as streaming platforms or ride memberships, so using your credit card rather than your bank account can be a smart idea. If you need to change payment methods, you will need to stop autopay 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 your reason for stopping automatic payments from your bank account, you can pause or end an automatic payment with one of the following options:
1. Log in to your account and update your payment information
The simplest way to stop your automatic payments is to log into your service provider account. Once you're logged in, go to the billing section and turn off automatic payments or update your payment details.
If you can't cancel automatic payments online or you're worried it didn't work, call the service provider's customer service line. Explain that you would like to stop automatic payments and ask for email or written confirmation that autopay has been turned off.
For added peace of mind, contact your bank or credit union and let them know you've revoked your consent for automatic payments. They may have a form you need to complete, but you can use this sample letter initially from the Consumer Financial Protection Bureau.
Make sure you keep your payment details up to date to avoid missing a payment and incurring late fees. It is a good idea to review your bank and credit card statements to ensure that the company is following your instructions.
If you asked for automatic payment to be stopped but you're still being charged, you may need to raise the issue. You can file a complaint with the Federal Trade Commission and your state attorney general.
No, closing a bank account does not stop automatic payments. The service provider will continue to withdraw funds from the account; if the account is closed, that means the payments won't go through, and missed payments will be reported to the major credit bureaus. You will also likely face late fees. In order to stop automatic payments properly, you must contact the service provider directly.
Read more: Does closing a bank account hurt your credit score?
A stop payment order is different from just canceling an automatic payment. It is a formal request to a financial institution to cancel a payment or check before it is drawn on the account. This action can make sense if you are the victim of a scam or 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 risk missing out on future payments. As a result, you could see your credit score drop. And, if you were eligible for a discount thanks to autopay, you'll lose that interest rate deduction.
If you're trying to get a handle on your subscriptions and memberships and want to cut back on your spending, bill negotiation apps can be attractive. These services review your bank and credit card statements on your behalf and identify recurring charges. 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 40% to 50% of the amount saved as payment.