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Are you unknowingly paying for subscriptions?

Recent data shows that what happened to Rae Leigh is far more common (and can cost you a lot more) than you might think.

A 2022 survey from market research firm C + R Research on subscription services and costs showed 42% of respondents had stopped using a subscription service but forgot they were still paying. The average person spent $219 a month on subscriptions, more than twice respondents’ average initial estimate of $86.

That’s a difference of $133 a month or $1,596 a year that could be better spent on your retirement nest egg or any other financial goals.

While clealry forgetfulness plays a part, it's not the only culprit.

In July, The Hollywood Reporter ran an experiment in which they subscribed to several streaming services and then attempted to cancel. They found that Prime Video, Disney+ and Paramount+ all required six steps to cancel a subscription and each included two offers for alternate subscription plans.

In other words, they concluded that customers often get stuck because companies make it much easier to sign up for a service than to cancel it.

More: Is Amazon Prime worth it?

How to get a free $20 to invest in your future

An app called Acorns automatically rounds up purchases made on your credit or debit card to the nearest dollar and places the excess "change" into a smart investment portfolio. Acorns offers a $20 welcome bonus, immediately from your first investment.

Get $20

How to avoid paying the (unexpected) price

1. Always review your financial statements

You don't have to pay for a subscription management app to find and stop recurring charges; simply read your bank and credit card statements. Get in the habit of reviewing them at least once a month. This is already important for monitoring your credit score and it can also help you catch and remedy those unwanted or incorrect transactions.

If you discover a charge for something you didn't receive and the vendor won't work with you to resolve it, follow Rae Leigh's lead and request a chargeback (a refund or statement credit) from your credit card company.

It is worth noting, you only have 60 days from when you are charged for the subscription or service to submit your request.

2. Look into the cancellation policy

Before signing up for a subscription service, take a moment to check out the cancellation process. If the process is more complicated than clicking "cancel" or you find the process difficult to navigate, that could be a red flag. Here are a couple things you can do before you sign up:

  • The fine print: The Federal Trade Commission (FTC) recommends reading a company's return and cancellation policies before subscribing to a service with automatic renewal.
  • Customer reviews: Take the time to read reviews online, especially ones that mention cancellation issues or recurring charges.

3. Beware of free trials

There's a reason so many companies offer free trials. In exchange for the free use of their product or service for a limited time, you usually have to provide your credit card information. And if you forget to cancel, you end up with a new monthly charge you may not have planned on.

If you do sign up for a free trial, make sure you cancel it before the free period ends. Be proactive and add a reminder to your calendar or smartphone for at least one day before your trial is set to end so you avoid getting charged for a service you don't want.

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About the Author

Sarah Brady

Sarah Brady

Freelance Contributor

Sarah Brady is a (self-)certified money nerd. She's a personal finance writer and speaker who's been helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah has written for Forbes Advisor, USA Today's Blueprint, FORTUNE, Experian, Investopedia and more,

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The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.