How I kept recurring charges from dragging me down
|February 7, 2014|
Have you ever signed up for a product or service that charged a monthly fee to your credit card, realized you no longer wanted it, but neglected to cancel?
Recurring charges have tripped me up several times lately, and it’s easy to see why. Automatic recurring subscriptions or orders typically work on the same principle as automating your savings, only in reverse.
When you put your saving on autopilot, you will likely sock away money because it requires no additional effort. But if you hand over your credit card information for a subscription — or a “free” trial offer — you’ll likely keep spending because you have to take action to stop.
For example, I subscribed to ConsumerReports.org during our home remodel. I chose to pay $6.95 a month rather than $30 for a year. I figured I’d do my research on major appliances in a month or two, then cancel my subscription. It’s been five months, we’ve purchased our appliances, and I haven’t canceled. I’ve already paid $34.75.
So, I looked at the reasons behind my failure to cancel subscriptions in a timely manner and possible solutions:
- I’m mentally minimizing small amounts of money. I have to admit, when I look at my credit card statement and see the charge for Consumer Reports, I make a mental note to cancel it, but it doesn’t seem urgent. Why? Partly because the amount is small. The solution: Think in yearly terms rather than monthly. If I go seven more months without canceling, this subscription will cost me almost $84. Yikes.
- I’m indecisive. Sometimes purchases are about something bigger, such as a wish or dream. When I signed up for a $19.99 monthly subscription to an online service that streams Latin American TV, it seemed to be good use of my “want” money. The big reason why I signed up? I wanted to brush up on my Spanish. But I signed up for the service on a whim and during a super busy time. I’ve watched exactly one Argentine game show and learned three new words. But if I cancel, I feel as though I’m giving up on my goal. The solution: Lean toward canceling; you can always sign up later or find a cheaper way to accomplish your goal. So, I’ve kissed my telenovelas goodbye for now.
- I’m being lazy. Sometimes, I just put off canceling a subscription. It’s usually because I don’t want to hunt down my account information and figure out how to cancel. The solution: I’ve vowed that any time I subscribe to something in the future, I’ll look at how to cancel and save that information, along with my username and password, and keep it in a safe place.
- Companies make it hard to cancel. Companies don’t want to see you — and your regular cash infusion — leave. I used a free trial to get my FICO score, and when I called to cancel, a nice lady gave me three different sales pitches to get me to stay. When I canceled my ConsumerReports.org subscription, this message popped up on my screen: “Wait! Don’t leave … why cancel your subscription now when you can take advantage of it until it expires? (Your credit card will not be charged again.)” I called and was told that I will get the access through the end of the month, for which I’ve already paid. But that message was confusing, and I can see how it might convince others not to cancel. The solution: Stay strong. If you have to talk to a person by phone, come up with a vague line (“I don’t need this service right now”) and be willing to repeat it several times.
So, what are some other ways you can avoid mindlessly having money siphoned from your account for subscriptions you don’t use? Here are some tips from personal finance bloggers:
- Elle Martinez, the blogger behind CoupleMoney.com, recommends reviewing your subscriptions regularly to gauge how much you’re using them and how much value you’re getting. Life changes, and Martinez, who was expecting a baby and anticipated having less free time, canceled a subscription to an online game and downgraded her Netflix subscription.
- FinanceGourmet.com recommends being careful about getting sucked into “free trial” offers — some are scams and even the legitimate ones often can be a hassle to cancel. Think of them not as a freebie, FinanceGourmet.com advises, but as a paid subscription with a free first month.
- Thousandaire.com advises you to “cancel a recurring bill today.” Thousandaire blogger Kevin McKee says he saved more than $1,000 a year by canceling his $60 a month cable and his $40 a month membership to a golf driving range.
So, here’s a challenge: Look at your budget right now and find one subscription or other recurring expense that you don’t want, use or need anymore and cancel it right away. No excuses. Take five minutes to do that and save a big chunk of money over the next year.