Stop Payment

Let us suppose that you have set up pre-authorized debit to pay monthly fees for your belonging to a sports club or donate small sums to the charity organization in your neighbourhood. At some point, however, you may wish to stop these regular payments, be it because you are moving to a new place and you won't be able to use the sports club's services any longer or because all of a sudden, you have lost your job and cannot afford donating to the local charity any more. In such cases, you can order a stop payment on the pre-authorized debit. However, there are also some faulty practices used by organizations so as to circumvent stop-payment orders. To begin with, you should know that almost all banks, mutual funds and credit card companies operating in Canada offer a stop-payment service to their customers. In simple terms, when the bank or any other financial institution issues a stop payment on a cheque that one of its clients has written, the cheque's recipient will not be able to cash it.

Do not forget that you should request a stop payment before the cheque you wrote has been cashed. Also, your bank may need some time to process your stop payment request, so the sooner you file it, the less you will have to wait before it takes effect.

When filing a stop-payment request, you have to provide your bank with accurate information about the cheque that needs to be cancelled. In particular, the banks will require the date on which the cheque was written, the exact amount of the cheque, the beneficiary's name, and other relevant information. Finally, you need to ask your bank or credit card company how much it will coast you to file a stop payment request.

Although it is your right to request a stop payment, some merchants are ready to employ faulty practices in order to keep on charging your checking account every month. While these practices are outrageous, they are smart ways to circumvent the law. For example, you set up a pre-authorized payment for a monthly membership of $20 with your local fitness club. At some time, however, you may wish to discontinue your membership for the reasons above or simply because you are no longer satisfied with the quality of the services that they offer. To do so, you will have to file a stop-payment request with your bank following their procedures, for which you will have to pay one-time fee of about, say, twelve dollars. It turns out, however, that the merchant, in your particular case – the fitness club, could circumvent the stop payment order by simply changing the amount it charges on your checking account from $20 to $25, for example. In this case, you will have to close your existing checking account and open another one, which may be a real pain in the neck. To prevent this trouble from troubling you in the future, you should simply be careful in authorizing anyone to debit your checking account.