What you need to know about banking services including credit cards, cheques, direct debits and automatic payments, and your rights if you have a problem.

Popular banking services

All banks provide telephone and internet banking services for their customers and, increasingly, businesses provide a bank account number with their invoice so you can pay them online. Some people still find cheques a useful way to pay.

Many credit cards now use contactless card technology such as Visa payWave and MasterCard PayPass, which let you pay simply by holding your card next to the payment machine (rather than swiping or inserting the card).

See also:

Credit cards 

Each time you charge your credit card, you borrow money. This is a revolving credit option: as long as you make the minimum monthly repayment, you can carry the balance over to the next month. Interest will be added to the balance. Banks and credit companies must have a minimum repayment warning on monthly credit card statements to emphasise the high costs if you only make the minimum repayments each month.

Direct debit

Direct debit is an agreement that the recipient (another person, business or company) can take money out of your account to pay your bill. You might use a direct debit for regular payments, and for bills where the amount changes from month to month, such as your electricity, phone, or credit card bill.

Automatic payment

Automatic payment is an arrangement for a specific amount of money to go from your bank account to the recipient’s bank account, eg your rent, savings, or loan payments.

Transferable cheques

A payee can transfer a cheque to someone else by signing their name on the back and naming a new payee. This is called 'endorsing' a cheque. However, if a transferable check is lost or stolen, it may be banked before it is cancelled.

Non-transferable cheques

To ensure the cheque is payable only to the intended person, write the payee’s name and write 'Not transferable' or 'A/c payee' between the two parallel lines across the cheque. Don’t accept a cheque unless it has your correct name on it.

Cash cheques

Writing a cheque out to 'cash' means anyone can cash it for the sum it is written out for. It does not have to be paid into a bank account. Don’t endorse the cheque 'not transferable’ or 'A/c payee'. Remember that if a cash cheque is lost, anyone can cash it.

Know your rights

Credit cards

If you exceed your credit card limit, you will be charged default interest. As a credit card account is a consumer credit contract, you are protected by the laws for consumer credit and borrowing money, including full disclosure of fees etc.

Read Understanding credit contracts to find out more.

You can apply to your bank or credit card company to reverse a charge on your credit card. This is called a credit card chargeback and includes any interest paid. Generally, the bank should grant a chargeback if your credit card was debited by mistake or fraud. Other reasons for obtaining a chargeback include the wrong products being delivered or non-delivery. Changing your mind about a purchase is not grounds for a chargeback.

You need to apply within a strict time limit from when you made the purchase, but you can still contact the bank or credit card company after this time limit. Check the terms of your credit card contract, which are displayed on their website.

When you transfer a credit card debt balance to a new bank, they pay off the debt from your old card. This allows you to take advantage of a lower interest rate offer, but often only for a set time before it increases. Other conditions to be aware of include:

  • new purchases and cash advances are not part of the transferred balance and will attract a higher interest rate
  • new spending on the card will not be paid off first, as it is standard for credit card payments to be allocated to the part of the debt with the lowest interest rate.

Read the Banking Ombudsman’s quick guide to credit card debt balance transfers(external link) .

If you are having problems with your bank, ask the Banking Ombudsman to help.

Direct debits and automatic payments

Direct debits are a service provided to you by the bank and the bank must act on your instructions. This service is separate to any agreement that you have with the recipient.

With a direct debit, money may be taken out of your account even if there is not enough money in it. This could put you into overdraft, which you may be charged interest on, and/or pay a fee for. Direct debits are different to automatic payments, which won’t get paid if there isn’t enough money.

You may need to cancel a direct debit for different reasons, eg the debt is paid off or disputed, there has been fraud, or you’ve changed your budget. Your bank must act on these instructions. You don’t need the trader’s permission to cancel the direct debit, but you should let them know. If the trader sends the bank another form, you can instruct the bank, in writing, to decline all future direct debit requests from that trader.

If you lose money because of your bank’s failure to cancel a direct debit authority, you may be entitled to compensation. This could include a refund for overdraft fees or penalty interest or to credit funds debited without authority, unless you benefited in some way from the payments (eg your electricity bill was paid even though the direct debit was unauthorised).

Automatic payments don’t usually get paid if there isn’t enough money. The bank will usually try a few times to take the money out. If there’s not enough money, the bank may charge you a penalty fee. This information will be included in the bank’s terms and conditions.


A bank can only refuse to honour a cheque for these reasons:

  • the cheque is over six months old
  • there are insufficient funds
  • the cheque has been reported lost or stolen
  • the cheque is fraudulent.

If the bank dishonours a cheque when they shouldn’t have and you suffer loss as a result, you can claim compensation from the bank.

You can ask the other party’s bank to stop or cancel a cheque any time before they present it for payment. Banks will not stop a cheque simply if you change your mind about a purchase. But they will stop a cheque that has been lost, stolen, or if you suspect you have been defrauded.

See the Code of Banking Practice(external link) for more information.

Code of Banking Practice

The Code of Banking Practice is an industry code developed by the New Zealand Bankers Association (NZBA). The Code sets out minimum standards of good banking practice in New Zealand and a complaints procedure.

The NZBA has also developed a set of voluntary guidelines on how banks should assist and meet the needs of older and disabled customers(external link) .

Managing your bank fees

Talk to your bank or visit their website for tips on how to reduce your bank fees. Interest.co.nz(external link) also has information about account fees charged by different organisations.

If you are having trouble cancelling a direct debit, speak to the bank manager, or refer the teller to the Banking Ombudsman’s quick guide on direct debits. If your bank doesn’t cancel your direct debit when you ask them to, that is a breach of the Code of Banking Practice(external link) .

Contact the bank first

If you have concerns about your bank's decisions or are in financial difficulty, you should contat your bank first.

Read Resolve a problem to find out more.

Next steps

If you are unable to resolve your issue directly with the bank, our Resolve It tool has information to help you take the next steps. These may include going to the Disputes Tribunal or District Court.

Resolve it: Banking, finance and insurance

Need more help?

Contact us for more guidance.

The Insolvency and Trustee Service(external link) and Federation of Family Budgeting Services(external link) may also be able to help if you are in financial difficulty.

Common situations

Credit card transfers

Douglas decides to transfer his current credit card debt of $1,000 to a new credit card provider as they are offering a low interest rate if you transfer to them. After six months of only paying off the minimum repayments, which goes towards his old debt at a lesser interest rate, all of his balance attracts the higher interest rate and he is much deeper in debt.


Dominic rang an 0800 number to order a set of tools he saw advertised on TV and charged it to his credit card account. Four weeks later Dominic’s credit card account had been debited but the tools hadn’t arrived. Dominic should contact the bank as soon as possible and make a chargeback application.

Direct debits

Tom has a direct debit for his gym membership. He cancels the gym membership after two years and asks his bank to cancel the direct debit. He checks his bank statement and notices he is still being charged two months later. He contacts the bank again and complains. The bank agrees to reimburse him for the two months of payments and to stop the direct debit immediately.

Cheques that are fraudulent

Andy sells a car to Jan and banks the cheque. He assumes the cheque is cleared after five days and writes out a few cheques after that date. These cheques bounce, and Andy finds out Jan has cancelled her cheque fraudulently and it has been dishonoured. Andy is now out of pocket.