General Questions About Direct Payment
Getting Started With Direct Payment
Concerns About Direct Payment
General Questions About Direct PaymentWhat is Direct Payment?Direct Payment is the electronic transfer of funds from your checking or savings account to the company to which you authorize a payment, usually used for recurring bill payments. What types of companies and organizations offer Direct Payment?More and more companies now offer Direct Payment to manage recurring payments of all sizes, from mortgage, insurance, and automobile financing payments to monthly utilities, magazine subscriptions, and health club memberships. How many people are using Direct Payment?The number of people enjoying the benefits of Direct Payment continues to increase at a steady pace. The number of Direct Payments increased by 5.3 percent in 2005 to 3 billion payments. Are there any other names for Direct Payment?Some companies may refer to Direct Payment as automatic bill payment, automatic debit, electronic bill payment or direct debit. If you are interested in signing up for Direct Payment with your billing companies, ask for it by name. Do I need a computer or Internet access to use Direct Payment?No. Direct Payment is easier than that. Once you sign up, your billing company automatically debits the amount due from your account on the payment due date. You do not have to do anything to pay your bills once you set up Direct Payment. The Internet is not involved at all. Whom should I notify to cancel Direct Payment?You will need to call the companies that send you bills - you will have to cancel your Direct Payment with each company separately. Getting Started With Direct PaymentHow do I sign up for Direct Payment?Signing up for Direct Payment is easy. You may have already received information about Direct Payment with your monthly bills. All you have to do is let each of the companies that send you bills know that you want to sign up. Call them or simply complete the authorization form if you've received one. How will I know the dollar amount that will be deducted from my account?The dollar amount can be fixed or variable. If the amount varies and you have not signed a variable amount authorization form, the billing company is required to send you a written notice of the dollar amount at least 10 days prior to the scheduled payment date. How will I know the date the payment will be deducted from my account?A scheduled payment date will be established when you sign up. If the payment is going to be deducted on a different date than the one you've scheduled, your billing company is required to send a written notice 7 days prior to the scheduled date. If the date falls on a federal holiday, the money will be deducted on the next business day. Will I still get a monthly bill from the companies?For most monthly bills, the answer is yes. Ask your billing company this question to be sure. Some companies do not send a monthly bill since one of the purposes of Direct Payment is to reduce paper. Those companies may send a yearly payment summary for your records. What if my payment date falls on a holiday?If your pay date falls on a holiday or other dates when your financial institution is closed, your payment will be debited from your account on the next business day. Will Direct Payment cost me money?No. One of the benefits of Direct Payment is that it will save you time and money in postage, checks and even late fees. Talk to the companies that send you bills. Concerns About Direct PaymentWhat if I have a problem?Problems with Direct Payment are rare. But if any questions should arise, all you need to do is contact the biller. The problem can usually be corrected immediately. What if I don't have enough money in my account when the Direct Payment is posted to my account?You are obligated to have the money in your account for your Direct Payments in the same way that you must have funds in your account if you write a check. If you do not have enough money in your account, your bank and billing company may charge you extra fees. What if the wrong amount of money is taken from my account?Problems with Direct Payment are rare and generally easy to correct. If you do encounter this problem, notify the company to whom you made the payment. You are protected under Federal law, and you can stop or reverse a payment you believe was made in error. What prevents a billing company from accessing my account whenever it wants to?Federal law (Federal Regulation E) protects you from unauthorized debits from your checking or savings account. With Direct Payment, you have the right to stop or reverse a payment you believe you did not authorize or was made in error. With Direct Payment, won't more people have access to my personal account information?No. Once you authorize the companies that send you bills to use Direct Payment, the information that you provide simply becomes part of the transfer information read by computers. No one needs to know or refer back to that information. |
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