Have you ever forgotten about a bill and been hit with late fees or interest? With pre-authorized debit, you no longer have to worry about remembering your bill payment dates. 

Whether its for recurring bills, utilities, or loan repayments, pre-authorized debit ensures your payments are made on time, without the hassle of manual transfers. Here’s how it works and why you should switch to PAD payments. 

What is Pre-Authorized Debit and How Does It Work?

Pre-authorized debit is a form of automatic payment that allows a company to withdraw a certain amount of money from your bank account each month. 

With a PAD agreement, you give the company permission to withdraw funds from your bank account on a schedule–either once a month, bi-weekly, or whatever you agree to. You essentially set it up once and never have to worry about it again.

Now, why would you want to set up pre-authorized debit rather than paying the bill yourself? 

Pre-authorized debits can be used to pay bills like credit cards, insurance, gym memberships, subscriptions, and utilities. Setting up a PAD rather than manually paying your bills makes it so much easier to track expenses, and you can generally “set it and forget it,” as you no longer have to manually pay your bills. 

Read about more benefits of pre-authorized debit here.

How to Set Up PAD Payments

To set up pre-authorized debit, you’ll need to fill out a PAD agreement between you and the company, saying that you agree to a monthly withdrawal from your account. You need to provide your banking details, such as account number, institution number, and transit number. 

The PAD agreement should include the frequency and amount of the pre-authorized debit, whether it is the same price each month or variable. If the amount changes monthly, the company should give you written notice at least ten days before the withdrawal.

The agreement should also include the steps needed to cancel the pre-authorized debit, the biller’s contact information, and how to file a dispute if needed. 

Once you sign the pre-authorized debit form, the fixed or variable amount will automatically come out of your bank account on the same date each month. All you need to do is make sure you have enough money in your account to cover the payment, otherwise, you may be charged a fee by your bank or go into overdraft. 

How to Stop Pre-Authorized Payments 

Whether you want to switch your payment method to a credit card to earn rewards or simply no longer require the services, you’ll need to know how to stop PAD payments. To do so, you may need to notify the company of your cancellation in writing. The specific details on how to cancel the PAD should be included in your agreement. 

Remember that just because you cancel your pre-authorized debit, it doesn’t mean that your contract is cancelled–you’ll need to set up another payment method or cancel the contract directly with the company. 

How to Pay Your Rent With PAD and Chexy 

Previously, you could only pay your rent through Chexy using a credit or debit card through Interac e-Transfer. Now, you can use pre-authorized debit with no additional fees and still earn rewards with your credit or debit card. 

Here’s how you can do so:

The onboarding process will remain the same, with the additional requirement for you to upload your lease agreement. Once your lease is uploaded, Chexy will create a personalized digital deposit account for you called your "Chexy Wallet." This account functions like a regular bank account, complete with unique account details, including a transit number, institutional number, and account number.

You can use these details to share with your landlord and set up PAD payments following your usual process. Each month, we’ll charge your credit card 4 business days before your rent is due, so the funds arrive in your wallet in time for your landlord to withdraw the funds on your rent-due date.

Note that we will not contact your landlord. It is important to provide them with your correct bank details so your rent payments can be successful! 

Using PAD with Chexy is a great way to make rent payments without having to remember to send your rent on time every month–it’ll automatically be done for you. Another great advantage is that you can build credit on your rental payments simply by opting into Chexy’s Credit Builder. 

When you rent with Chexy for a few months and build up your credit enough to get approved for a credit card, you can switch your payment method to your credit card and start earning rewards like cashback and points that you can turn into free flights. 

So, what are you waiting for? Get started with Chexy today.

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