Warning- if you think you've closed your CC account?

mick21

(sorry if this is old news)

I recently received a statement for a Halifax card I cancelled and cut up 12 months ago. On the statement there was a transaction for CSMA subscription (civil service motoring assc).
Halifax say this is normal -to have money going out of a closed account and apprarently happens a lot with SKY, AOL and a couple of other firms, and the only way to stop it is to inform CSMA that I've cancelled the card and HAlifax aren't able to do anything.
Although I'm happy to keep the CSMA sub, the worrying think is what if I'd moved I naturally wouldn't bother updating a closed cc acount? so interest would be building for god knows how long.

Apparantly this happens with all cards, so be careful folks.

Clariman

You are right to point that out. People need to be more aware that there is a huge difference between standing orders/direct debits from bank accounts and a "continuous authority" on a credit card. Briefly summarised, they are as follows.

Standing Order - Regular payments that you make from a bank account where you decide how many payments there will be, how much they are and when they go. The money is SENT from your bank account to the person you are paying. Standing order payments are usually for the same amount each time. You can stop or change a standing order at any time via your bank. (Of course, you still may have a contract to pay the payee for the service you have but they can't take the money from your bank account - you are in control).

Direct Debit. Regular payments that you make from your bank account. The 2 main differences between a DD and a standing order are (1) The amount many vary from month to month (which makes it very flexible for things like paying off credit cards or for bills that change) and (2) the money is PULLED by the payee rather than SENT by your bank. However, you set up the direct debit and can stop it at any time via your bank and you are protected by the Direct Debit Guarantee.

Continuous Authority - This is where you set up a regular payment on your credit card and many people see it as being the credit card equivalent of a direct debit, but it has some key differences. A continuous authority does what it says on the tin. You are giving another organisation a "continuous authority" to charge you card indefinitely. There is no end date - you are allowing them to charge your card until you can get them to stop. There is no direct debit guarantee equivalent that I am aware of. Even if your credit card account is closed, the card issuer will honour the charges because you have allowed (i.e. given authority) the payee to make those charges continuously ! I have only ever set one up once and that was with a reputable organisation and it was by mistake (!). Personally, I wouldn't touch them with a bargepole because there is little or no control. The only way to stop being charged is to get the other party to stop charging your card. You can not get your credit card issues to do it. This is OK if it is a reputable organisation but if it is some dodgy organisation then you are in trouble.

Clariman

alared

http://news.bbc.co.uk/1/hi/programmes/moneybox/2099270.stm

Reaper

And there is a Sticky thread on the subject
http://forums.moneysavingexpert.com/showthread.html?t=256

Teak

Yeah Capital one say the same thing. Account closed, but not. Stupid really. The card should become invalid and be refused like if the expiry date was incorrect.

On a legal view, is this legal? That credit card companies can prevent you from ending or withdrawing from your credit agreement with them? Basically you sign up for a credit card and sign up for life? They can cancel on you and prevent you using the card. Why can't consumers do the same, cancel and prevent the bank using the credit card? Seems a bit unfair, which the law is meant to protect against unfair contract conditions.

Al_Mac

Frightening.:eek:

eagle

Teak wrote:

Yeah Capital one say the same thing. Account closed, but not. Stupid really. The card should become invalid and be refused like if the expiry date was incorrect.

On a legal view, is this legal? That credit card companies can prevent you from ending or withdrawing from your credit agreement with them? Basically you sign up for a credit card and sign up for life? They can cancel on you and prevent you using the card. Why can't consumers do the same, cancel and prevent the bank using the credit card? Seems a bit unfair, which the law is meant to protect against unfair contract conditions.

Interestingly enough, I noticed that my online LloydsTSB account still shows my "cancelled" platinum credit card. I can click on the link for the card and still see a summary of past transactions. My available credit shows as "nil". I even got a letter sent by post saying that they've noticed I cancelled my direct debit for the card. They wanted to "pointed out" alternative ways to pay my monthly bill.

I called them to query this and they said that as far as they know, my account was cancelled but couldn't explain why I am able to see my cancelled card account online. When I initially got the card, the card appeared on my online account automatically - I didn't have to do anything (I already had another account with this bank, hence why I had internet banking).

Incidentally, I also cancelled my (only) MBNA card account and I can still log in to the internet banking service. My available credit and personal details are all showing.

I wonder if I tried to make a transaction (online perhaps, where they wouldn't need the card) if it would get accepted and show on the online service?

davidcampbell

Clariman wrote:

Continuous Authority - This is where you set up a regular payment on your credit card and many people see it as being the credit card equivalent of a direct debit, but it has some key differences. A continuous authority does what it says on the tin.



excellent post clariman.

ill just add in case people dont know. CPA's can be set up on debit cards as well. this is not exclusive to credit cards.

DC