Published On: Tue, Aug 23rd, 2016

Direct Debit Danger

It’s a shocking example: “I’ve paid £16/mth for white goods we no longer have for 6 YEARS.” Many waste £1,000s a year paying for things they don’t need or never use. So whether it’s mags, gyms, dating sites or paid TV, get tough and cut ’em down.

Join the Cancellation Heroes: have your own rigorous super-audit to banish these bank balance bandits for good.

Join the Cancellation Heroes

Many of us have costly subscriptions on gyms, mags, dating sites, packaged bank accounts and more, yet rarely or never use them – or with time and house moves, forget about ’em altogether. It’s likely hundreds of millions are wasted this way.Cancellation Day superhero

Here’s a painful example from Martin’s Radio 2 phone-in with Jeremy Vine:

I looked through my standing orders for the first time in ages. I’ve been paying repair insurance for two white goods we no longer have for six years, at £16 a month.

Over six years, that’s £1,200 down the pan – think what you could do with that! So whether it’s the weekly mag you pay for but rarely read, or the unused gym membership you’re guiltily hoarding, take action now

Being a Cancellation Hero is simple: unearth EVERY wasted regular payment and stop any you no longer need or use.

Flush ’em out and you’ll soon have more cash in your pocket (no cape or tights required). All you need are your bank and credit card statements and a little know-how.

Tales of cash flushed down the drain

It’s amazing what many pay for and never use. Discovering long-forgotten payments is common. Examples have been rolling in via Twitter, email, and the Cancellation Successforum:

Moved 2 years ago, but was still paying a direct debit to my old gym (£330 per year ) and to what was my local wildlife centre (£43 per year) – both of which are now too far to visit (and I never went to the gym anyway!). Also cancelled a phone insurance plan for £10 a month, as the phone is now so old it isn’t worth the insurance Total saving for this year over £500!

Trawling through my bank statement, I had been paying for mobile phone insurance I wasn’t using since 2009!!

Cancelled the direct debit and was informed the refund for £856 would be with me within 7 days! Kerching!

Just claimed back £650 in incorrectly charged (I switched and they kept taking) electricity… Sad thing is I didn’t do it sooner.

I had applicance cover… when I read this article and checked the policy I realised most of my applicances would not be covered. I have now cancelled £22 per month. Thank you MSE – you have saved me money again!

I used to pay £102 a month for a family gym membership for 1 year, and I only went about 5 times.

Give your regular payments the once-over

If you’re paying for something you don’t need, or have forgotten about, STOP! There are three types of regular payment, and it’s possible all three could be leaving your coffers each month, quarter or year, and many you may not even know about. Use these steps to weed ’em out:

Step 1: Do a direct debit and standing order audit

To start your audit, you need to know what you’re looking for. The first two to tackle are standing orders and direct debits. A standing order’s an instruction from you to your bank to pay a fixed amount out at regular intervals. superheroIt’s usually free, and you can cancel it when you want.

Direct debits are set up when you sign a direct debit mandate to let companies take a fixed or variable amount of cash. You’ve a right to contact your bank to cancel these any time you like. If there’s an error you get a full refund from the bank, rather than the company itself.

How to audit ’em

Turn detective and use your statements to hunt them out. It’s not just about your bank account; it applies to credit cards too:

  • Online banking. Most online accounts have a section which displays all your standing orders and direct debits. If not, there should at least be easy access to a year’s worth of statements.
  • Branch or phone-based accounts. Your account provider should be able to list all the standing orders and direct debits for you. If not, then at the very least request a year’s worth of statements.

Many regular payments are quarterly, bi-annual or yearly so stretch back 12 months to ensure you cover all outgoings.

Step 2: Tackle hidden recurring payments

These are the third type of regular payments. They’re a little more complicated because you can’t cancel them on your own – but you can tell your card provider to do so.

The key to recurring payments is the company will ask for the long number on the top of your credit or debit card rather than your bank details. If this happens – an entirely different structure of rules comes into play. See the full Recurring Payments guide.

How to audit ’em

They can be tough to spot. You may’ve set one up for mags, telecoms or websites (including adult websites) without realising. It’s also known as a ‘continuous payment authority’. Effectively it’s a permission to regularly take payment when needed, so it just looks like anything else on your statement.

Scarily, you may find you’ve got recurring payments for companies you haven’t heard of. Try a quick Google search to identify them, or contact your bank or card provider. They could be:unfit superhero

  • Unused gym memberships
  • Unused subscription TV channels
  • Unread magazine subscriptions
  • Old dating site memberships
  • Unused packaged bank accounts
  • Unused club memberships (eg, golf)
  • Insurance for items you no longer have
  • Unwanted charity direct debits

Some MoneySavers who regularly check their bank accounts have reported finding direct debits and/or continuous card payments they didn’t realise they’d set up. If it’s happened to you, it may be related to a free trial followed by a monthly subscription after making an online purchase.

A few years ago, only the company taking the recurring payments could cancel them, but rules have changed, and you can now tell your card provider that you want to cancel.

If you find a recurring payment and you no longer want/get the product/service, it’s best to contact the company taking the payment first and ask them to cancel it. If they refuse, contact your bank or card provider and tell them to cancel it.

If you’ve not been receiving any goods or services in return for your payment (this isn’t paying for a gym or golf club, but just not bothering to go) then you may be able to get some payments back. Ask the company taking the recurring payment first. If they refuse to refund, you can try the chargeback process with your card provider.

Is it worth it?

This is the real backbone of being a Cancellation Hero – evaluating whether each payment is worth it. With every single one you find, ask three questions (see Martin’s Money Mantras). Work through these three key questions, then if it isn’t doing you any good, CANCEL IT (ensure you aren’t in breach of contract by doing so first, see below).

Ask yourself: Do I use it?

Ask yourself if you actually use what you’re paying for. Be ruthless. Many people think they use a magazine subscription when they actually only glance through one in five copies. So in this case, buying individual mags only when needed is likely to cost far less, making the unused mag subscription a waste of cash.

I just checked Jan membership renewals (I work in a health club) 8.65% who joined last Jan came 10 times or fewer”

– via Twitter

Ask yourself: Is it worth it?

To help, work out the real cost per go. For example, use a £50-a-month gym membership three times a week and you’re effectively paying just over £4 a time. Yet go three times a year and you’re effectively paying £200 for each workout – the same as a posh spa weekend! Some Cancellation Hero confessions sent to us via Twitter:

I worked out I’ve paid £140 for a 20 minute swim!

I once paid £1,440 golf membership for 18 holes!

A friend worked out that last year, each gym visit cost £76.

Even if the payment’s for something worthwhile, that still doesn’t mean there aren’t dangers (see below). Use the Regular Payments Calc below to see the yearly cost. £20 a month mightn’t sound like much, but £240 a year is!

 

[Source: Moneysavingexpert]