Banking and Insurance: Pre-authorized debits

A pre-authorized debit (or CPA) is an agreement you make that allows another party, or "biller", to withdraw money directly from your account. For example, you can authorize your gym to automatically withdraw your monthly membership fees directly from your account.

In order to do this, the biller must ask you to sign an agreement outlining the terms and conditions under which you are giving the biller permission to withdraw the funds from your account. This agreement must state how much money can be withdrawn from your account, the date when the money will be taken out and whether the amount can change, based on your instructions. Some financial institutions may require you to provide a voided cheque, so they can verify that it is your account the money is being taken from.

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