A recurring payment is an automatic charge a business pulls from your credit card, debit card, or bank account on a set schedule — weekly, monthly, or annually — under a one-time authorization you signed at sign-up. Streaming subscriptions, gym memberships, insurance premiums, utility bills, and loan payments are the everyday examples. What the phrase actually means for you, though, is a set of federal rules: how the business had to get your permission, when it has to warn you about changing amounts, how you can shut the payments off, and what happens when something goes wrong. Those rules aren’t the same for a card as for a bank account, and the difference is worth knowing before you set one up.
Fixed vs. Variable Charges
Recurring payments come in two shapes. A fixed payment is the same amount every cycle, like a $15 streaming plan or a flat insurance premium. A variable payment changes with your usage or balance — an electric bill, a credit card minimum, a metered service.
The distinction has a legal consequence. When a recurring charge pulled from your bank account will differ from the previous amount, the business or your financial institution must send you written notice of the new amount and the transfer date at least 10 days before the withdrawal. You can also agree to be notified only when a charge falls outside a range you set, instead of before every single transfer.1eCFR. 12 CFR 1005.10 – Preauthorized Transfers
How the Authorization Works
To start a recurring payment, you hand over the account details the business needs to pull funds. For an ACH transfer from a checking or savings account, that’s your bank’s nine-digit routing number and your account number. For a card, it’s the card number, expiration date, and security code.
Federal law requires that any preauthorized transfer from your bank account be authorized in writing, either on a signed paper form or an electronic equivalent, and the business has to give you a copy of that authorization.2GovInfo. 15 USC 1693e – Preauthorized Transfers The form typically states the amount (or a maximum, for variable charges) and the start date. A business that skips the written authorization, or never sends you a copy, is violating the Electronic Fund Transfer Act.
How to Stop a Recurring Payment
You can stop a recurring payment from your bank account at any time, even after you authorized it. The Consumer Financial Protection Bureau recommends two steps together.3Consumer Financial Protection Bureau. You Have Protections When It Comes to Automatic Debit Payments From Your Account
First, revoke the business’s authorization. Tell the company in writing that you’re withdrawing permission for the automatic charges, and follow up by phone.
Second, place a stop payment order with your bank or credit union. You can do this in person, by phone, or in writing, and it has to reach the bank at least three business days before the next scheduled charge. Your bank must honor the order.1eCFR. 12 CFR 1005.10 – Preauthorized Transfers If you give the order over the phone, the bank may require a written confirmation within 14 days; skip that step and an oral stop payment order expires.4Consumer Financial Protection Bureau. 12 CFR 1005.10 – Preauthorized Transfers If the business tries to resubmit the charge later, your bank has to keep blocking it until you say otherwise. Banks usually charge a fee to process a stop payment order.
Card Protections vs. Bank Account Protections
Where the recurring charge lands changes your rights considerably. A charge on a credit card and a charge pulled from your bank account are governed by different laws with different limits and different dispute options.
On a Credit Card
The Truth in Lending Act caps your liability for unauthorized credit card charges at $50, no matter how long the problem goes unnoticed, as long as the issuer gave you notice of that liability and a way to report unauthorized use.5Office of the Law Revision Counsel. 15 USC 1643 – Liability of Holder of Credit Card Most major issuers offer zero-liability policies that go further.
You can also dispute billing errors — wrong amounts, charges for goods or services you never received, duplicate charges — by writing your card issuer within 60 days of the statement date. The issuer must acknowledge the dispute within 30 days and resolve it within two billing cycles (no more than 90 days), and it can’t try to collect the disputed amount while the investigation is running.6Office of the Law Revision Counsel. 15 USC 1666 – Correction of Billing Errors
On a Debit Card or Bank Account
When the money comes straight out of your bank account, whether by debit card or ACH, your protections come from the Electronic Fund Transfer Act and Regulation E, and your liability depends on how fast you report the problem:
- Within two business days of discovering the issue: liability capped at $50.
- After two business days but within 60 days of your statement: liability up to $500.
- After 60 days from your statement: you can be on the hook for the full amount of unauthorized charges that occur after that window closes.7eCFR. 12 CFR 205.6 – Liability of Consumer for Unauthorized Transfers
Debit card dispute rights are also narrower. Credit card holders can dispute a wider range of problems, including quality issues with what they bought, while debit card disputes generally cover only unauthorized charges and incorrect amounts.8Federal Trade Commission. Comparing Credit, Charge, Secured Credit, Debit, or Prepaid Cards For that reason, running recurring charges through a credit card generally leaves you with stronger fallback options than putting them on a debit card or bank account.
Disputing a Wrong Charge
If a recurring charge from your bank account is wrong or unauthorized, tell your bank as soon as you can. The bank generally has 10 business days to investigate and decide whether an error occurred.9HelpWithMyBank.gov. How Long Can the Bank Take to Correct an EFT Error?
If the bank needs longer, it can take up to 45 days, but only if it credits your account for the disputed amount in the meantime. That provisional credit has to be applied within 10 business days of your error notice, and the bank has to tell you the amount and date within two business days after that.10Consumer Financial Protection Bureau. 12 CFR 1005.11 – Procedures for Resolving Errors You have full use of the credited funds during the review. If the bank ultimately finds no error, it can reverse the credit after telling you.
If something like a hospital stay or extended travel kept you from reporting on time, the bank must extend the normal deadlines to a reasonable period.7eCFR. 12 CFR 205.6 – Liability of Consumer for Unauthorized Transfers
If a business keeps charging you after you’ve revoked authorization and placed a stop payment order, document every occurrence. Each unauthorized withdrawal strengthens both your bank dispute and any legal claim you might bring under the EFTA, which allows recovery of your actual losses plus statutory damages of $100 to $1,000 per violation, along with attorney’s fees and court costs.11Office of the Law Revision Counsel. 15 USC 1693m – Civil Liability