Credit cards, something strange ..

Just found out that if you make a direct debit charge on your credit card, your credit card company will refuse to cancel it. The supplier has to stop charging you ….

In my case the supplier refuses to stop charging me even though I cancelled the service months ago ! The only way to stop this is to cancel your credit card !!

11 thoughts on “Credit cards, something strange ..

  1. Dear Shekhar,
    I thought you’d already know that the credit cards business is the biggest racket on the planet. Warren Buffet, a legendary icon for all those who want to become rich, has advised young people to stay away from credit cards.
    Debit cards are a much better option than credit cards. You don’t get to spend more than what’s in your account in Debit cards, so you can never splurge recklessly.
    There are many other ways in which the credit cards companies will fleece you. They charge exhorbitant interest rates on the credit you draw on your card. Most users don’t get their bills on time so they are forced to pay heavy penalties for late payment. Not to mention the annual maintenance charges.
    If you ask me, stick to good old cash or debit cards while shopping or eating out. For paying regular bills like electricity & phone etc. you can activate online bill payment facility in your internet enabled bank account.

  2. Good advice Navin. Sorry to hear about your exprience Shekhar – you did not mention if this direct-debit order you made was ‘online’.
    Though i never faced this specific problem – as far as i ccan remember , i had a building society direct-debiting my credit card and once the period was over – i was not charged again.
    I guess its imprtant to specify the period of direct-debit. Usually most banks , ask for the specific period , and the card you wish to pay the direct debit standing order.
    I guess its the bane of the e-commerce. there are a lot of loop holes , and it does bring to focus how careful we must be while making online transactions.
    It makes me wonder about the future of the internet and e-commerce though. Currency may well become redundant , with a globalised economy and uniform skill assessment paradigms , we are on the verge of moving into the era of ‘plastic money’ and bio-chips implanted in our bodies that will have all the memory of our credit histories , skills and ‘bill’ us accordingly. Paper money will then be seen in Museums. But identity theft and credit theft wud be even more difficult find and e-security very difficult to enforce.
    How can you catch a hypothetical remote hacker stealing a few millions of ‘plastic money points’ from an e-commerce bank ?

  3. Dear Shekhar,
    I think as the contract for direct debit authorization is between the ‘Customer’ and the ‘Supplier’ the credit card company has to honor the charges, and the ‘Supplier’ is violating the contract by continuing to charge after the period of service/subscription has ended.
    They (suppliers) think that if the charges are small, or if they continue doing it, the customer will continue to pay. This often happens in Sports Gyms here in NY when people try to leave. If there is no option, we’ll have to cancel the credit card but it is best use debit cards or a savings bank account for direct debits as we can call our bank and not allow any more charges. Banks always have stricter laws and I have always been paying my bills through debits, but I do not enroll in auto-debits (excluding electricity).
    Himanshu – NYC

  4. I dont think that’s true. If you did not authorize the merchant to charge your card, you can always dispute the charge with your credit card provider and refuse to pay. This has been my experience with unauthorized direct debit charges.

  5. Shekhar, Normally — you would have setup direct debit instruction via your service provider and they send debit instruction to your credit card company. if you have canceled the service(and you have confirmation for your cancellation) but still got debited then you can dispute that transaction. your credit card should investigate and will take the case with the merchant/service provider.
    – your service provide will/should always have options for cancellation (and refund for extra charges).. if they dont, You can sue them.. and if its the case – strongly suggest you done.
    – most online service say free trial period but you need to provide credit card details. and somewhere in small letter in their T&C(which you would have agreed), they would have mention that auto-subscription after trial period until you cancel it and cancellation process might 10/20 working days. so you endup paying for 1month anyways.
    – most cards these days offer transaction protection i.e allow you to block or set limit for certain transactions (like online purchase, gambling,etc..) and credit card insurance against such fraud.
    – to reduce such risk
    * use paypal or have separate (lower limit)credit card only for internet usage
    * ofcourse, never use debit cards.. not just online even while traveling.

  6. navin:
    bad bad advice! i assume you are in india, because in the usa, many credit cards give you a discount if you use them. the standard caveats apply of course – do not overcharge, pay your complete balance every month etc etc.
    mr. kapur:
    my friend had a similar experience with aol, but that was a debit from his bank account, not visa card!
    – s.b.

  7. Hi some body,
    U work for a credit card company? LOL. In India we get discounts anyway, credit cards or no credit cards. The advice I gave, works very well for me. I guess it does for Warren Buffet too.
    But if it doesn’t work for you. No sweat. To each his own.

  8. arati , i guess Shekhar’s post has achieved its objectives with your comment there ! – totally hilarious !

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