How to set up direct debits using your credit card

How to set up direct debits using your credit card

Everyone has regular monthly expenses and, considering our busy schedules, staying on top of them can get challenging. These could include gym memberships, utility payments and streaming subscriptions, among others. Rather than keeping track of the bills month on month, you may want to consider just setting up direct debits on your credit card.

When you pay direct debit using a credit card, you’re not only ensuring you meet your financial obligations on time, but you’re also keeping your credit score in check. However, before you rush to put all payments on your credit card, there are some risks to keep in mind

How can I set up direct debit on my credit card?

You’ll need to give permission to each provider to automatically debit your credit card for a fixed or variable amount each month.

Each credit card issuer could have a different procedure for setting up direct debit on your credit card, but you can usually do it by reaching out to your service provider or merchant online or on the telephone and providing them with your credit card details, including your credit card number, expiry date and card verification code. If you’re setting up or managing your account online, you’ll see an option of adding your credit card as a preferred payment option. Enter your credit card details and from then on all your payments will be automatically deducted from your account when the next bill is due.

Questionas to ask before setting up a direct debit using a credit card

Setting up a direct debit from your credit card can be a convenient payment option, however before you do it, ask yourself the following:

  • Is the service provider you're sending the direct debit to trustworthy? Use your credit card or debit card to set up a direct debit only for those services and providers that you trust.
  • Are you aware of the steps to cancel the direct debit? Before you set up the direct debit, familiarise yourself with the steps to cancel the direct debit if you don't need it anymore or are planning to close the credit card.
  • Will you be able to make your credit card payments? Most importantly, make sure that you can pay off your credit card bills comfortably at the end of each month before you set up a direct debit. Any unpaid amount may accrue interest, and you'll end up paying more than the actual bill amount, as well as risk falling into debt.

Check your bank statements regularly

Once you’ve set up your direct debit from your credit card, it is easy to forget about it. However, you need to keep checking your bank statement regularly to make sure that you’re being billed correctly and your payments are being made on time.

It is essential to keep track of all your payments because on closer examination you might find that you’re still being billed for services that you might have discontinued, such as a gym membership, or a streaming subscription.

How can I cancel a direct debit from a credit card?

You might need to cancel a direct debit if you're closing your credit card or you no longer use the service that you’re paying. In case of a card closer, ensure your bills continue to get paid on time by setting up direct debits from another account.

If you’re cancelling a direct debit because you no longer use the service, you can simply call your service provider and cancel direct debit over the phone, or you can manage your payment through your online account. You could also contact your credit card provider to cancel your direct debit and ask for a written confirmation.

Check your bank statement regularly to ensure that the direct debits have been cancelled.

What are the possible disadvantages of direct debits from a credit card?

You might be considering direct debit to a credit card as a convenient way to pay your bills on time or to keep your credit scores in check. However, in both cases, you should also be aware of the following risks:

  1. Debt. Most direct debits are typically ongoing expenses, such as utilities bills. Generally speaking, most Australians should attempt to manage their budgets to meet these expenses with a standard debit card. If you’re putting your ongoing expenses on your credit card because you cannot meet them with your regular income, you may want to consider whether putting them on your credit card is the best course of action.
    This can lead to snowballing debt if you’re unable to pay your balance, or even meet minimum repayments, each statement period. Plus, by putting your direct debits on to your credit card you run the risk of accruing interest on these payments. Consider speaking with a financial adviser if you’re struggling to pay your ongoing expenses.
  2. Timing of the direct debit: If the balance on your credit card is due before you get paid, then you might be better off not scheduling a direct debit right then. A single debit might not be a problem, but if you have arranged for multiple direct debits to cover numerous financial obligations, collectively they could send you into overdraw.
  3. Overdraws: You may also easily slip into overdraw if your account balance does not have adequate funds to cover an automatic debit, or if you max out your credit card. Not only this, but if you’re unable to pay your balance in full each statement period, you will accrue interest on your outstanding balance, plus potentially pay a costly overdraw fee.

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Learn more about credit cards

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.

How to pay a credit card from another bank

Paying or transferring debt from one lender to the other is called a balance transfer. This involves transferring part or all of the debt from a credit card with one lender to a credit card with another. As part of the process, your new lender will pay out the old lender, so that you now owe the same amount of money but to a new institution.

Many credit card providers offer an interest-free period on balance transfers to help new applicants better handle their debt. During this period, cardholders are not required to pay interest on the debt they brought over from the other card. This can be a great opportunity for consumers to pay off credit card debt with no interest. There are often fees associated with balance transfers; normally, these are a percentage of the amount transferred.

So make sure you read the terms and conditions of the card before transferring any debt across.

How do you pay off credit cards?

The best way to pay off a credit card bill is to set a realistic spending budget and stick to it. Each month, you’ll get a credit card statement detailing how much you owe and how long it will take to pay off the balance by making minimum repayments. If you only make the minimum repayments, it will take you years to pay off your outstanding balance and add extra costs in interest charges. To avoid any extra charges, you should pay the entire bill. 

What should I do if my ANZ credit card has expired?

Your ANZ credit card is considered expired only after the last day of the month and year marked on your card. For instance, if your card’s expiry date reads 03/22, it is valid until 31 March 2022 and expires on 1 April 2022. Typically, you should have received a new credit card by that date, and you won’t have to request a new card. 

Once you get the new card, you should remember to switch any automatic payments you have - such as a utility or mobile phone bill - from your expired credit card to your new credit card. Equally, if you are using CardPay Direct to repay your ANZ credit card debt, you may need to update the credit card account details for that service as well. 

In case the new card doesn’t arrive by the expiry date of your current credit card, you can call ANZ on 13 22 73 to find out the reason and if you need to request an expedited card. Please note that if you were planning to close your credit card account or request a credit card upgrade, you may need to call ANZ at least before the 25th of the month your current credit card expires in, as that’s when they may send you the new credit card.

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

What should you do if your credit card is compromised?

Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.

Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.

Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.

Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

What can I do about my Commonwealth Bank expired credit card?

You’ll typically receive your replacement Commonwealth Bank credit card before your current one expires. 

Once you receive the replacement card, you may need to update the new card with all the direct debits that you had set up on your expired Commonwealth Bank credit card. These could include insurance payments, electricity or gas bills, and monthly entertainment subscriptions.

To see a list of all your regular payments in NetBank, follow these steps:

  1. Log on to NetBank
  2. Click on ‘settings’
  3. Go to ‘product requests’, and select ‘credit card regular payments’. 

If you don’t use NetBank, you can see the list of your regular payments on your most recent credit card statement. Keep in mind, this list may not be complete and you should also check your past statements or your transaction history. 

If you haven’t received your replacement card before your current card expires, call 13 22 21 and the bank will send a new card to you. 

It is important that you safely discard your expired credit card. This often means cutting it up with scissors and throwing it out. 

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

How do I apply for a BOQ credit card limit increase?

If you’re an existing BOQ customer, you can request a BOQ credit card limit increase over a phone call. However, you should remember that owning and using a credit card is a matter of financial responsibility, so it might be worth thinking this decision through. 

When requesting a credit card limit increase, you’ll need to be just as responsible in terms of how much you earn and can set aside to repay the outstanding card balance. A credit card company may approve a credit limit increase only if you can show that you have either the income or the disposable income, which is the amount you have left after all expenses have been paid out.

For this purpose, you may need to submit your latest income documents and bank statements for an increase. You may want to estimate how much you usually have left after deducting your expenses, and then use this amount to try and convince the credit card company. Also, you may prefer to pay off the card balance in full each month and thus avoid paying interest on the card, helping you back up any claims of financial responsibility, as well. 

Remember that you may not be able to apply for a credit card limit increase beyond any limitations on the type of card you own. For instance, if you own a card whose ceiling is $10,000, and your current limit is $5,000, you won't likely be able to apply for a $10,000 credit card limit increase.

How do you apply for a credit card?

You can apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and easy. Before you get your application started, you’ll need to gather your personal information like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities. To be eligible for a credit card, you’ll need to be an Australian citizen over 18 and earn a minimum of $15,000 each year. Once you’ve applied for a credit card, you should get a response fairly instantly. If your credit card application has been approved, you should receive a welcome pack with your new credit card within 10-15 days.

How do you cancel a credit card?

It’s important to cancel your old cards to avoid any additional fees. Unless you’re doing a balance transfer, you’ll need to pay the outstanding balance before you cancel your credit card. If you’ve opted for a card with reward points, make sure you redeem or transfer the points before you close your account. To avoid any bounced payments and save yourself an admin headache, redirect all your direct debits to a new card or account. Once you’ve done all the preparation, call your bank or credit card provider to get the cancellation underway. Once you receive a confirmation letter, destroy your card and make sure the numbers aren’t legible.

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.