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Cancelling a recurring payment or continuous payment authority on a payday loan

When you give your credit or debit card details to a company, and allow them to take regular payments from your account, it’s known as a continuous payment authority (CPA). A CPA is also sometimes referred to as ‘recurring transactions’ or ‘regular card payments’.

What is a continuous payment authority?

A continuous payment authority is a type of regular payment made using your debit or credit card. It’s set up when you give your card details to a company so they can take one or more payments from you at a later date.

There’s often confusion around how these payments work, and what rights you have compared to other regular payments such as direct debits and standing orders.

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A number of measures are being rolled out to help people who are struggling financially because of coronavirus. These include payment breaks for many types of credit and mortgages, changes to overdraft charges, help for renters and the extension of the moratorium period for debts in Scotland.

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Continuous payment authority is a popular method of payment for:

CPA is different to direct debit. Payments made by CPA aren’t covered by the direct debit guarantee, but the law still offers you similar protections. For example, you’re still entitled to a refund of any money taken without your permission.

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How do I stop recurring payments for loans?

You can cancel a continuous payment authority by contacting your bank or the company taking the payment.

When you cancel a CPA it means you’re withdrawing your permission for the creditor to use your card details in the future. If any more payments are taken after you’ve withdrawn your permission they’d be ‘unauthorised’.

The deadline for stopping a CPA payment is before the close of business on the working day before your payment is due to be taken.

  • If your payment was due to leave on a Friday, you’d need to get in touch with your creditor or bank before they close on the Thursday to cancel it.
  • If your payment was due on a Monday, you’d need to cancel it before your creditor or bank closes on the previous Friday.

If you miss this deadline you won’t be able to stop the payment being taken.

Template letter to cancel a CPA

To cancel a CPA you’ll need to contact the company taking the payment, or your bank to cancel your recurring payment. This can be done over the phone, by email or in a bank branch, and we also have a continuous payment authority template letter (pdf) you can use to do this. If the payment is due to be taken in the next few days, we recommend cancelling it by phone.

If you call your creditor we’d recommend you keep a note of the time and date of the phone call, as well as the name of the person you’ve spoken to about it. If you contact your bank to stop a CPA you should also contact the company as well, to let them know.

Even if you’ve cancelled a CPA you’ll still owe the money for the payments you’ve agreed to make. If you’re struggling to make the agreed payments you should get in touch with the company to let them know.

Arranging a refund of  an unauthorised payment

If you’ve cancelled a continuous payment authority before the deadline and the payment is still taken, this is known as an ‘unauthorised’ payment. If this happens you should get in touch with your bank to let them know. They should arrange a refund of the payment and any related charges you have may have received due to the money leaving your account.

Cancelling recurring payments to a payday loan

If you can’t afford to make the payments towards your payday loan you should be entitled to cancel them. If your creditor refuses to refund the payment, or refuses to cancel your CPA, you can make a complaint.

Missing payments towards a payday loan may be the sign of a debt problem. If you need help, use our online debt advice tool call us for free advice about debt solutions that suit your situation.