This could save you a fortune....

tpurch

Sorry but I still don't understand why this would be!

If you close the account then credit facility is closed and therefore the credit card company should return any requests as unpaid. Assuming you fail to contact the company, surely it would be down to the company trying to get paid to contact the person to claim payment via another method. or am I missing something... cos If I close my bank account then the bank would refuse to pay out to the company (even if I had a £4000 overdraft facility before I closed the account!)


I accept that it is your responsiblity to contact the companies and get payment method changed or cancel the service, but I don't accept that a account that is closed can still pay out a transaction, this seems fundermentally wrong to me! and surely if you cancel the Credit Account then the Terms and Conditions can no longer apply to you since you no longer hold an account with them.

But you may have to live with the consiquences of not paying the companies that you didn't contact ie late payment fee's or not being covered on a policy etc.

King_Of_Fools

tpurch wrote:

Sorry but I still don't understand why this would be!

If you close the account then credit facility is closed and therefore the credit card company should return any requests as unpaid. Assuming you fail to contact the company, surely it would be down to the company trying to get paid to contact the person to claim payment via another method. or am I missing something... cos If I close my bank account then the bank would refuse to pay out to the company (even if I had a £4000 overdraft facility before I closed the account!)

I accept that it is your responsiblity to contact the companies and get payment method changed or cancel the service, but I don't accept that a account that is closed can still pay out a transaction, this seems fundermentally wrong to me! and surely if you cancel the Credit Account then the Terms and Conditions can no longer apply to you since you no longer hold an account with them.

But you may have to live with the consiquences of not paying the companies that you didn't contact ie late payment fee's or not being covered on a policy etc.

Unfortunately, you cannot close a credit card account, in reality. The reason for this is if you have authorised a payment (even a one-off payment) that has not cleared, the bank has a legal requirement to pay the bill and pass this onto you for payment.

I believe that this is also true of debit cards attached to a "closed" current account. The bank has a duty to pass on the bill to you and ask you for a payment.

tpurch

King_Of_Fools wrote:

Unfortunately, you cannot close a credit card account, in reality. The reason for this is if you have authorised a payment (even a one-off payment) that has not cleared, the bank has a legal requirement to pay the bill and pass this onto you for payment.

I believe that this is also true of debit cards attached to a "closed" current account. The bank has a duty to pass on the bill to you and ask you for a payment.

I see where you are going with this but doesn't the bank authorise/accept the payment - As a customer you ask for payment to be made using a card, the issuers bank authorises it not the customer!. The issuing bank decides if they are going to afford you credit if they choose to they can withdraw that facitility at anytime. Equally I know that banks also have a right to claw back money that was paid out to a merchant if they wish to.

Why should a CPA be different to any other type transaction. If I pay my mortgage and there aren't sufficient funds in my account it could be returned unpaid. If I try to withdraw cash at ATM but I have but there aren't sufficient funds then I can't, and have you never being in a queue at tesco when someone gets a transaction declined.

So Why is a CPA any different? (Could it be because they want it to be!) A Bank is unable to tell if the a merchant is likely to request further payments on CPA. They don't want the to have to check with each company because its hassle for them, so they put it on the customer!!

If you have a letter from the Bank/Credit Company confirming that the account is closed. Then surely this releases you from any and all T&Cs for that account.

King_Of_Fools

tpurch wrote:

I see where you are going with this but doesn't the bank authorise/accept the payment - As a customer you ask for payment to be made using a card, the issuers bank authorises it not the customer!. The issuing bank decides if they are going to afford you credit if they choose to they can withdraw that facitility at anytime. Equally I know that banks also have a right to claw back money that was paid out to a merchant if they wish to.

Why should a CPA be different to any other type transaction. If I pay my mortgage and there aren't sufficient funds in my account it could be returned unpaid. If I try to withdraw cash at ATM but I have but there aren't sufficient funds then I can't, and have you never being in a queue at tesco when someone gets a transaction declined.

So Why is a CPA any different? (Could it be because they want it to be!) A Bank is unable to tell if the a merchant is likely to request further payments on CPA. They don't want the to have to check with each company because its hassle for them, so they put it on the customer!!

If you have a letter from the Bank/Credit Company confirming that the account is closed. Then surely this releases you from any and all T&Cs for that account.

When you pay using a card you authorise the shop to claim the payment from the card company who then in-turn claims the money from you. This is very different from the card company authorising that the card is genuine in order for the shop to accept it.

The main difference between the mortgage/ATM example is the time factor. In the mortgage/ATM case, if you do not have available funds the transaction is stopped, if you do then the money is "transferred" immediately. With a card (although there may be a available funds check) the money is not immediately transferred but an authorisation is made that the shop can claim the money at a later date (up to 7 years later). For this reason you can never be sure that there is not still a claim in the pipeline so the account can never be closed properly.

The only difference between normal card payements and CPAs is that for the first the authorisation is made for one fixed amount where as the CPA is authorised for any number of transactions of any amount for the rest of time!

The difference between CPAs and Direct Debits is that for a DD the bank has a record of every one set up and so you can cancel a DD with the bank. However, the card company does not have a record of any CPAs so it cannot contact the retailers who hold these so you cannot cancel these with the card company.

The government is trying to change CPAs to be more like DDs to better protect the consumer. How long this will take and whether this will apply to all CPAs retrospectively is not known. Also whether they can enforce this outside the UK is unlikely (you can set up a CPA with any retailer in the world).

grumbler

tpurch wrote:

I see where you are going with this but doesn't the bank authorise/accept the payment - As a customer you ask for payment to be made using a card, the issuers bank authorises it not the customer!.

There are two different types of authorisation that share the same name. You always authorise your transactions. In addition, sometimes (not always) the retailer gets your bank involved by requesting electronic authorisation from it. As a result of electronic authorisation your available balance gets lower instanly, but this is not always the case.

The issuing bank decides if they are going to afford you credit if they choose to they can withdraw that facitility at anytime.

Even if they reduce your credit (or overdraft) limit this generally cannot stop you from going over the limit.

Equally I know that banks also have a right to claw back money that was paid out to a merchant if they wish to.

They have a right, but only if the retailer cannot prove that you authorised the transaction.

Why should a CPA be different to any other type transaction.

It shouldn't. The only difference is that you authorse several (or regular) future transactions at once.

If I try to withdraw cash at ATM but I have but there aren't sufficient funds then I can't, and have you never being in a queue at tesco when someone gets a transaction declined.

AFAIK this can happen only with basic debit cards such as Visa Electron and Solo, which always require electornic authorisation (besides for very small purchases).

Yes, CPAs are very dangerous and should be avoided unless you deal with a reputable company. Allegedly, some changes are coming ...

dodgy1

CPAs can reactivate a closed account after 3 years. Many is the time I phoned somebody for being in arrears and as soon as I saw the amount I knew it was caused by a CPA and the late fee it generated.

Please remember if closing an account make sure you do not have any payment protection or card protection policies on the card. These are the biggest culprits for problems.

If you are cancelling any CPAs make a note of the time and the date and who you spokw with. The times I've seen AOL keep taking payments even when a customer had documented evidence that they requested them to cease.