My brother in-law recently paid off his car loan in full. He paid around $2,000 to pay it off as he wanted to be done with it. Actually, he was on an automatic payment system and called his bank to make sure payments would not reoccur. Needless to say, his bank assured him he was fine. As few weeks passed by, he even forgot about that. But just few days ago, he noticed that $300 is taken out of his account for the car payment.

Needless to say, he went to the bank the following the day along with his paperworks. The bank teller couldn’t figure out why the payment has been made. He said to my brother in-law that he is about to see the $300 in his bank account within 5 working days. Even after 10 days, he didn’t get his money back.

Now the thing becomes even funnier. He called the bank in and spoke to several people. At the end of the day, they explained to him that they can’t turn the loans off as the website which contains the loan info doesn’t exist anymore. By their words, they thought since he had a $0 balance, it wouldn’t do anything or withdraw anything out of his bank account. They also said that it’s very unusual for deductions to continue after a notice to stop has been sent. But every time my brother in-law phoned the bank to query why the payments were still being deducted, he was told that his previous requests to stop taking payments hadn’t been actioned internally.

In such cases where a bank acts in a strange way or talks some excuses, it’s a good idea to go there and tell them you want to dispute the charge. If they keep claiming they can’t do it, they can’t find your information or if they continue with the excuses, just contact the CFPB and your state’s attorney general office. This will help you tremendously to get out of such situations. And it will get sorted out with ease. However, I’d consider moving to another bank after settling the case.

Such mistakes happen and when they do happen, it’s usually on the bank’s end. In these situations, it’s a good idea to get a current statement from the bank to make sure they have all the payments. From there you can see if the charges are what you expect and if your payments have been updated correctly. Most likely it’s an accounting mistake where they forgot to stop the auto draft payment. However, in such these complicated situations, they can see that your account now has a balance and so they can and should refund you.

My brother’s experience seems to be far from unusual. One of my readers, who did not want to be named, said that when she received a large bonus from a company she works for, her bank used it to clear her balance. However, it continued to take monthly payments from her salary for even six months afterwards. Another reader said he had overpaid $600 because the company carried on taking payments until he pointed out several times that his debt of $10,000 had been repaid in full.

In such cases, it’s a good idea to act quickly and not allow these things to spiral out of control. If needed, you should look into closing the account. Actually, close the account, but don’t empty it as they can still charge you overdraft fees for an active account. A closed account stays closed. You may also wonder, does a closed account affects your credit score? Yes, it does. And adding positive information to your credit report will help improve your credit even faster. Keeping your credit card balances below 50% of your credit limit is another way to boost your credit score.

Now that he put this problem behind him, I told him to do some things to make sure it doesn’t happen again. First and foremost, to keep life’s financial bumps causing too much damage in the future, it’s a good idea to aggressively save money in an emergency savings account. This allows making payments on your credit accounts during financial bumps and interruptions in income. It can also help paying large, unexpected expenses without blowing up your credit.