# Direct Debits: How They Work and How to Stop One > How a direct debit takes money from your account, how to stop one through your bank, what happens when one fails and how to time them around payday. Canonical HTML: https://getclova.com/blog/direct-debits Clova is an Australian budgeting app. [Join the waitlist](https://getclova.com/) [Home](https://getclova.com/) → [Guides](https://getclova.com/blog) → [Budgeting](https://getclova.com/blog/topic/budgeting) → [Direct Debits: How They Work and How to Stop One](https://getclova.com/blog/direct-debits) - Author: Marnix - Published: 2026-09-25 You signed up for the gym once, and since then money has left your account every fortnight without you lifting a finger. That's the point of a direct debit, and it's handy right up until you want it to stop, or it comes out on a day your account is nearly empty. Knowing who can stop a payment, and choosing when it comes out, makes both easier to fix. ## How a direct debit works A **direct debit** is a payment a business takes from your bank account on a schedule you've agreed to. When you sign up, you fill in a **direct debit request**, which gives the business your BSB (the number that identifies your bank and branch) and your account number, and permission to take payments from that account. From then on, the business starts each payment, not you. The amount can be fixed, like a gym membership, or change each time, like an electricity bill. Fixed amounts on fixed dates are the easiest to plan around because you know what's coming and when. Some businesses take regular payments from your debit or credit card instead. These **recurring card payments** look the same on your statement but run through the card system, and that changes how you stop them. ## How to stop a direct debit Who you contact first depends on what you gave the business when you signed up. Who to contact first: | Kind of payment | What you gave the business | First | Then | | --- | --- | --- | --- | | Direct debit | Your BSB and account number | Ask your bank: it has to stop the payments | Check cancellation terms with the business | | Recurring card payment | Your card number | Ask the business to stop charging your card | Ask your bank if the charges keep coming | From Moneysmart's guidance on direct debits and the Banking Code of Practice. Banks that subscribe to the Banking Code of Practice have to promptly process your request to cancel an account direct debit and tell the business's bank. You don't need the business to agree. Ask your bank for a letter or email confirming the date the payments stop, and keep a copy. Telling the business as well isn't required, but it helps, because **stopping the payments doesn't end the contract**. If you still owe money under the agreement, such as a notice period on a gym membership, it's still owed, and you'll need to pay it another way. Our guide to [cancelling subscriptions](/blog/cancel-subscriptions) walks through ending the service itself. The Financial Rights Legal Centre has sample letters for [your bank](https://financialrights.org.au/sample-letter/letter-to-bank-canceling-direct-debit-authority/) and [the business](https://financialrights.org.au/sample-letter/merchant-cancelling-a-direct-debit-authority/). If your bank doesn't stop a direct debit after you've asked, you can complain to the bank, then to the [Australian Financial Complaints Authority](https://www.afca.org.au/make-a-complaint). Your bank also can't charge you overdraft fees to cover a debit taken after you asked it to cancel. ## When a direct debit fails With too little money, a debit may fail or overdraw your account. A rejected payment is called a **dishonour** or bounce; an overdraft means the bank pays it and your balance goes below zero. Bank and business fees may apply, and an unpaid bill is still due. The date a debit comes out matters as much as the amount. In a fortnightly pay cycle, the day before payday is often the day your account is lowest. Here's a made-up example: Sam is paid every second Thursday, and her phone company takes $45 on the Wednesday before. The same $45 bill on a better day. Sam is paid every second Thursday. - Before: her phone debit comes out on the Wednesday before payday, when her account is lowest. - After: it comes out on the Friday after the earlier payday. Sam is made up. Some businesses let you choose or change the date a debit comes out, so it's worth asking for one just after payday. For a bill that changes each time, checking the amount before it's due helps too. If your bills run monthly while your pay is fortnightly, our guide to [fortnightly pay and monthly bills](/blog/fortnightly-pay-monthly-bills) shows how to line the two up. We are building Clova, a budgeting app that shows bills due before payday beside your available money. Clova is an Australian budgeting app. Join the waitlist and we’ll be in touch. [Join the waitlist](https://getclova.com/) ## If a direct debit looks wrong A debit you don't recognise, for more than you agreed or after you cancelled, is worth raising with your bank as soon as you see it. Banks that subscribe to the Banking Code must promptly investigate an unauthorised direct debit when you ask. Reading your statement after each payday makes these easier to catch while they're fresh. A card chargeback is a different process that only covers card payments, so it can't reverse a direct debit. Our guide to [chargebacks](/blog/chargebacks-explained) explains when that route applies instead. A direct debit is a set of instructions you can change. Choosing the date it comes out, and knowing your bank will stop it when you ask, keeps it working for you. ## A note from us Clova brings upcoming bills into your pay's plan, including the ones that leave your account automatically. ## Common questions ### Can my bank cancel a direct debit for me? Yes. Banks that subscribe to the Banking Code of Practice must promptly process a request to cancel a direct debit from your account. You don't need the business's permission. It's still worth telling the business too, and asking your bank for written confirmation. ### How do I move my direct debits to a new bank account? Give each business your new BSB and account number, usually by updating your payment details with them or filling in a new direct debit form. Keep the old account open, with enough money in it, until each payment has come out of the new one. ### What happens if a direct debit bounces? A rejected payment leaves the bill unpaid; bank and business dishonour fees may apply. The bill is still owed, so contact the business to pay it another way or arrange a new date. ### Can a business keep taking money after I cancel? It shouldn't, once your bank has processed the cancellation. If a debit still comes out, contact your bank straight away. Moneysmart says your bank can't charge you overdraft fees to cover a debit taken after you asked it to cancel. ### Is a direct debit the same as a recurring card payment? No. A direct debit uses your BSB and account number, and your bank can stop it. A recurring card payment uses your card number, and you stop it by contacting the business first, then your bank if it continues. ### What if I’m offered PayTo? PayTo takes money from your account through an agreement you approve and manage in your online banking. Only approve an agreement you were expecting, because scammers can pose as a bank or business to get one approved. ## Sources 1. [Direct debits](https://moneysmart.gov.au/banking/direct-debits) · ASIC Moneysmart 2. [Banking Code of Practice (28 February 2025), paragraphs 152 and 153](https://www.ausbanking.org.au/wp-content/uploads/2021/06/Banking-Code-of-Practice-28.02.25.pdf) · Australian Banking Association 3. [Sample letter: cancelling a direct debit authority with your bank](https://financialrights.org.au/sample-letter/letter-to-bank-canceling-direct-debit-authority/) · Financial Rights Legal Centre 4. [PayTo](https://payto.com.au/) · Australian Payments Plus 5. [Make a complaint](https://www.afca.org.au/make-a-complaint) · Australian Financial Complaints Authority ## Related reading - [How to find and cancel subscriptions in Australia](https://getclova.com/blog/cancel-subscriptions) - [How much money do you have left before payday?](https://getclova.com/blog/money-left-before-payday) - [How to budget for monthly bills on fortnightly pay](https://getclova.com/blog/fortnightly-pay-monthly-bills) [Report a correction](https://getclova.com/contact) This guide explains a budgeting method in general terms; it doesn't consider your circumstances.