A 2017 study done by creditcards.com uncovered some surprising truths about recurring charges and subscription services. The most astonishing is that around 35% of consumers have subscriptions with auto payment services and that more than 40% found cancelling the service so difficult that they just gave up. Yes, that means that an astonishing number of consumers are duped into leaving subscriptions active or on auto payment when they don’t really want it. If you look at it that way, it could mean that millions of people are spending anywhere from $8 per month to over $40 per month on something they don’t want, use or need. So, that begs the question: Are your subscriptions costing you too much each year?
After all, it isn’t just the auto payment enrollments that snag us into unwelcome or unnecessary expenses. There are also free trials that automatically enroll us after a set amount of time, and often without being legally obliged to remind us that we set up that automatic payment or enrollment. In fact, that study specifically explains that there are “merchants out there whose business models largely depend on consumers not fully understanding their offer terms.”
So, what can you do? The good news is that there are a few great answers to the dilemma.
What to Do about Unwanted Recurring Charges
Sites like Netflix, Amazon and other popular streaming services are good at making the terms of service clear and helping you understand how the billing and payment options will work. For example, if you use Amazon Prime, you can set your account to auto-renew each year or you can get a reminder about the payment due date.
However, there are scores of other services and companies that do not work in such a budget-friendly way. That is why you need to follow simple steps to protect yourself and your bottom line:
- Tighten the budget – The creditcards.com report identified an interesting fact – the people surveyed who earned less than $30k per year were also the most likely to follow very tight budgets. Because of this, they also did not make a habit of signing on for anything without also understanding the weekly or monthly financial implications to their budgets. So, if you have a budget, but find you are spending on unexpected charges, it is time to tighten that budget and mentally check the habit of thinking, “I’ll remember to cancel before this comes due” or something like it. That also means never giving out credit information to gain “free” access to any sort of site or service as this is usually what is known as a “negative offer” that leads to recurring charges.
- Find the leaks – If you have had one or more instances of checking the bank statement or getting an email that surprises you with details of a subscription or recurring charge, it is time to get some help assessing the situation. There are currently websites like Trim, Clarity Money and Truebill that allow you to provide them with access to your spending habits (via bank accounts and credit card bills). They identify the recurring charges and other suspicious expenses that might be subscriptions or likely candidates for recurring fees. Then, with a few simple clicks you can actually have the site cancel those services you do not want. There are also sites such as PriceSlash that help you reduce your monthly expenses by auditing standard bills for hidden fees or pricing hikes.
- Find substitutes for the many temptations of subscription options – This is such a valuable way to recoup financial losses from recurring services that I want to focus on it for a while…
Replace Costly Subscriptions with Appealing Freebies
Let me tell you a bit about my own process of discovery. I was a dedicated streamer with accounts that ranged the whole spectrum, from Amazon Prime to Pandora and more. I finally sat down to do the math and realized that between the online learning sites, the recorded book options, the music and the TV and movies (not to mention the eBooks), I was looking at hundreds of dollars each month. I was also guilty of going for “free” offers that were actually negative offers and found my bank account whacked with hefty subscription fees that I had to quickly take action to cancel. Usually, I could never recoup the first payment, but would succeed in cancelling the service afterward.
It was at that time that I learned of sites and apps like Truebill and ClarityMoney. I used them to allow them to assess my credit accounts, checking account and PayPal payments. I was shocked at what I saw and used them to quickly cancel recurring donations I no longer wished to make in addition to a pretty wide range of monthly subscriptions.
However, I soon missed some of those services and began to look for lower priced substitutes or any free services. If you are a regular library user, you probably know where I found my solutions. If not, I have a few sound words of advice for you: Go to the library…today.
With a library card and an account in good standing, I could use my library’s amazing website to access everything from free eBooks and premium recorded books to enormous libraries of current magazines and periodicals, language and learning courses, and more. Here’s what I found:
- OverDrive – This can be used on my laptop or mobile device and lets me enjoy free use of eBooks and audiobooks, with the caveat that you are actually checking them out as if in a real world library. Sometimes there is a waiting list and there is also a due date after which the files go inactive. There are also new release movies through OverDrive and, my personal favorite feature, a huge library of online courses via a section called Lynda.
- Hoopla – If you are a big fan of streaming to devices like Roku or your Kindle, this is an app you’ll love. With it, I can check out a limited number of eBooks, audiobooks, movies, albums and even digital comics each month, and entirely for free.
- Freading – This is an eBook specific tool that has no waiting lists and a stupefying list of titles to download to the app, which works with iOS and Android devices.
- Freegal – This is a free music service with more than 13 million songs and more than 40k in videos! It is limited to Sony Music’s catalog, but is enormous.
- RBdigital – This is described as “the world’s largest newsstand” and gives me the chance to read from an enormous library of full color magazines – including back listed titles. There are no waiting lists or holds, and you can often keep titles as long as you would like!
- Qello – Though I learned my library was a bit unique with this one, it does show up in many areas. This is a live concert streaming feature that works via an app that you can use on a mobile device, tablet or computer.
- Consumer Reports – Again, not all libraries with e-services have it, but if they do it can be a great way to save money on a subscription to the site or magazine. My library gives me free use of any Consumer Report publication available online, and it is incredibly helpful when shopping around for everything from cars to blenders.
- ScienceFlix – If you have a curious mind or a science student in your household, this allows you to get curriculum driven content at different levels and with lots of great features.
So, with this assortment, I was able to overcome my longing for everything from recent magazines and streaming movies to eBooks and more. And all it took was a visit to the library and a few minutes loading the apps to my devices and creating my accounts. While you can visit most sites independently, you should do so via your library’s portal (with your card in hand as most need the bar code) to get access for free.
If you want that in real world dollars, these services let me cut my connection to sites like Netflix and Audible as well as Pandora and Great Courses Plus. I canceled several magazine subscriptions, too and in the end I was able to shave around $65 from the budget each month.
And if that doesn’t seem like a lot, just consider that those services represent a drop in the proverbial bucket. For instance, one expert at TechCrunch had this to say about our tendency to over-spend on subscriptions. “Netflix, Hulu, Amazon Prime, Birchbox, Spotify, HBO NOW, newspapers, box of the month clubs, meal services, and more: The rise of subscription-based commerce means consumers now pay for a number of items on a recurring basis. But even a few dollars spent here and there have a way of adding up, and eating into your household’s budget.”
That is most certainly true. After all, it is easy to add extra channels or features that bump up pricing with a few clicks. Hulu, as an example, has a pricing structure that lets you opt out of most advertising for a few dollars more per month and Amazon makes it astonishingly simple to tack on monthly subscriptions for services like HBO or other premiums. They even make it hard to avoid by advertising shows alongside the programs included in your Prime membership.
You might think, “It’s only $10 per month…what can it hurt?” But, that $10 turns into $120 per year. Do that across the board and you can easily see $1000 per year disappearing from the budget. Clearly, this is why the people with earnings of $30k or less are the least likely to get tripped up by subscription and negative offers or recurring payment options.
Take the time to assess your subscriptions, and definitely use tools like Trim, Truebill or ClarityMoney. In fact, Trim is actually able to look at more than your subscriptions and may show you services you no longer need. I forgot a renter’s insurance policy from a few years earlier and it was still active and billing on a quarterly basis (yes, I am guilty of failing to check and itemize the bank statement). Because it was only $28 per quarter, I was overlooking it. Yet, that was $100 out of my pocket every year!
Trim is great because it might even tag your grocery or food habits, such as overspending on Starbucks or food delivery services like GrubHub or Seamless.
And one of the nicest features about the money saving, subscription cutting apps is that some of them have referral bonuses. I am particularly happy about them because it means, as a publisher and affiliate marketer, I am going to be able to help out my friends, family members, co-workers and readers by recommending these services. But, it also means I get a bit of a financial reward for doing so!
Studies are proving that millenials and generation x-ers are some of the most frequent sufferers of negative offers and overlooked recurring charges. These sap the budget and drain the bank account. Using modern tools in addition to tighter budgeting can help millions of consumers keep millions of dollars in their hands. If you are like me and a bit less rigid with expenditures that you might be, you could easily be losing hundreds to thousands of dollars each year on subscription services alone. Take a look at what you have or use the tools itemized above. Let them cancel the most costly or least used, or even cancel them all and turn to the free services from most libraries.
If you find you do save a lot, why not blog about it or share it to a special social media page. If you point your readers towards those same tools, you can also earn some referral dollars and rebuild your bank balance quickly and easily!