Stop Orders and Debit Orders can be taken off your account automatically. A Stop Order is a fixed amount that you specify to be paid to a third party on a specific day every month. You have to complete a form at the bank giving the name and account details of the third party as well as your own details. You can set a date for the stop order to terminate, or you can let it continue until you notify the bank that you want it stopped.
Debit orders are usually initiated by a third party such as a gym or insurance company to whom you have to make a regular payment for a service or policy. The third party will obtain all your banking details from you as well as your signature on a form authorising the debit order. The amount of a debit order may change without you being notified, although this is usually a bad business practice! You can instruct the bank to stop payment of the debit order.
A Debit Orders Warning Story
About two years ago I had a contract with one of the more popular health club groups. According to my contract (or the part I was aware of anyway) I was a signed up member for two years from the date of joining. During this time a debit order was set up to deduct my fees ($65 per month) directly from my bank account.
The month after my contract expired I saw on my statement that a debit order for the sum of $125,00 had been paid by my bank to the gym. I immediately contacted the Health club where the manager told me that part of the fine print said that if I did not notify the club three months prior to the expiry of my contract then it would be renewed on a monthly basis at the new fee rate … in my case an increase of almost 100 percent!
Worse still, in order to stop the agreement I was told I had to give three months’ notice. This would have been bad enough at the old rate let alone the new one. I was facing paying not the $65 I was used to but $180 extra as well! Whilst I was technically in the wrong I nonetheless objected to the fact that the club had not reminded me of the conditions in time for me to prevent the renewal kicking in – something I felt would have been a common courtesy. Luckily for me the manager agreed and the contract – and debit order – were cancelled immediately.
There are two messages in this story. First – read the small print of everything you sign that gives anyone permission to remove money from your account, and second – check your statement every month because its often the only way to pick these “funnies” up before you accidentally go into overdraft!
