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My kid is joining Karate Club and they want payment in the form of auto withdrawal from a bank account. I asked if they accept check or cash and they said no. They use some third party service to perform the transaction from the bank account. The karate program is 1 year long but they charge month to month.

I am not comfortable giving my bank information to them or to anyone. So I am thinking what if I create a separate bank account with only enough funds to cover karate expenses month to month. This means they won't be able to charge every month if my kid decides that he/she has lost interest.

What do you think?

What happens if they try to charge the new account even after I cancel the membership and the account does not have any funds?

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    Depends on your contract and the laws in your jurisdiction. If it's an annual contract (assumed legal in your jurisdiction) but they choose to allow people to pay the annual fee monthly, you may be legally responsible for the remaining payments. In the U.S., that could mean getting sent to collections.
    – Stan H
    Feb 1 at 23:54
  • Thanks Stan. I will need to find that out.
    – john doe
    Feb 1 at 23:56
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    Do you realize that if you gave someone a check then you're giving them the exact same bank information? Your bank account & routing number are printed along the bottom of the check. In fact if you use a check any many supermarkets they explicitly notify you that they don't deposit your check as a check, but instead use that banking info off the check to make an ACH transaction instead.
    – brhans
    Feb 2 at 13:43
  • Thanks! @brhans
    – john doe
    Feb 2 at 14:21

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I'd suggest checking whether there are other martial arts schools/classes in the area. They may be more reasonable. For example, When I was a kid there was a good Judo dojo at my local Y.

A separate account is not an unreasonable precaution. Of course it would be up to you to maintain sufficient balance and/or deal with any charges that bounced.

On the other hand: Check with your bank. You are generally not responsible for unauthorized charges against your account, and the bank knows exactly who to demand the money back from since they would know who it was transferred to. This may be as secure as a check, and may not put you at any more risk of fees/penalties. The bank can give you an authoritative answer on how they handle this sort of transaction.

And remember that any check you write carries your bank's identity, your account number, your name, and often your address. If that's all they are asking for you haven't really increased the attack surface

(Though for electronic transfer my preference is to get the other party's account information and have my bank push payments to them rather than letting them pull, to keep the transaction under my direct control.)

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  • Thanks! I called my bank (Ally Bank) in USA. And they told me that if you are not happy with the charge then you can dispute it. But it may take couple of months. I also need to read the agreement. Because if the agreement is saying that this is a contract for 12 months and I am paying monthly then even if my kid quits after 2 days, I will be responsible for 12 months. This is what I don't want.
    – john doe
    Feb 2 at 2:59
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    Unfortunately, yearly commitments are common in the exercise-center world. But not universal, and there are classes which recognize that kids are kids and have shorter commitments or trial periods. If you're in a less populated area, or you have limited transportation available, you may not have good options available, but it's certainly worth looking for other teachers who may have other policies. I think my classes at the Y had a quarterly commitment, single payment.
    – keshlam
    Feb 2 at 5:06
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    @johndoe if you don't want to commit to 12 months then don't sign the contract. If you sign the 12-month contract with the intention of being able to back out by simply not paying - you're opening yourself up to potential debt-collection and negative credit report impact.
    – brhans
    Feb 2 at 13:47
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    @johndoe Well yeah - that's how they've calculated things to make it worthwhile to them to give you the option of backing out early. If you commit to 12 months then they're giving you a discount. If you don't want to commit to 12 months then you're not entitled to that discount. A business needs to manage & project their cash-flow in order to justify expenses. Don't try to screw them over.
    – brhans
    Feb 2 at 15:15
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    I'd have left off that last sentence, @brhans, since I don't think there's malice here. But yes, that's their business model. The surcharge may also be because they have a limited number of slots so admitting you means rejecting someone else who might have stayed, and/or because the class's structure makes admitting another student mid-term problematic. Either deal with it or shop elsewhere or drop the idea. (And yes, U know that if the kid has friends in this particular class the latter two may be a hard sell.)
    – keshlam
    Feb 2 at 16:01

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