What are rollovers?
If you have taken out a payday loan and are coming to the end of the repayment period, the lender may offer you a chance to roll the balance over for another month. This might sound great in principle, but rollovers involve additional costs and charges which can often make things more difficult.
New rules state that payday lenders cannot rollover an outstanding payday loan balance more than twice. If a rollover occurs, the lender must send you an information sheet with contact details for various debt advice organisations. A copy of this information sheet can be seen here.
What is continuous payment authority?
When you give your credit or debit card details to a company, you are authorising them to take regular payments. This is known as a ‘recurring transaction’ or ‘continuous payment authority’ (CPA).
They work like direct debits, but can be very difficult to cancel and they don’t offer the same guarantee if the amount or payment date changes. This means companies can take as much as they like without giving you notice.
Payday lenders cannot make more than two attempts to deduct money from a debtor’s bank account by means of continuous payment authority unless a rollover has been agreed.