When Sarah Pekkanen let her son sign up for a free trial of an online educational subscription, she figured she would cancel it before charges began and in the meantime, her son, now 12, would learn maths. But she forgot to cancel it and soon the charges started piling up.
“I paid for something that we never used,” says Ms Pekkanen, a novelist from Maryland in the US. When she eventually noticed the charges and tried to cancel, it ended up taking a couple of hours over several days.
With the rising popularity of subscriptions for streaming services, monthly product boxes and more, Ms Pekkanen’s experience is increasingly common.
UBS Group, a financial services company, predicts the subscription economy aimed at consumers and businesses will have an 18 per cent growth rate and be one of the world’s fastest-growing industries by 2025.
Many subscriptions are automatically renewed, which means consumers can waste hundreds of dollars a year on products or services they are barely using.
Try a subscription detox
To put a stop to that kind of waste, consider a subscription detox: eliminate every subscription from your budget as soon as you are able to so you can determine what you truly miss.
“When you cut out all of them, then you can pick and choose what you add back in,” says Allison Baggerly, founder of the money saving website Inspired Budget. She also suggests giving yourself time to be subscription-free before signing back up for anything.
Zina Kumok, a certified financial health counsellor and money coach, prefers to conduct that kind of financial spring cleaning once a quarter.
“The best way to combat inertia around auto-renew is to build awareness around what you are actually using and enjoying,” she says. Ms Kumok signed up for a make-up subscription but then realised she barely used the products, so she cancelled it.
It is also worth calculating what monthly subscriptions are costing you each year because it adds up: a $10-a-month subscription might not sound like much but you might rather have an extra $120 in your bank account at the end of the year instead.
A less radical approach can also work
If a total detox sounds too extreme, then you can try a more gradual method: carefully review every subscription you currently have and cull the ones you no longer want.
“Go through your card statements and figure out how much you are actually spending,” says Delia Fernandez, a certified financial planner in California. She also suggests looking up your subscriptions on the app store on your phone and, if you are an Amazon customer, looking for subscriptions such as Audible or Amazon Music.
The next step, she says, is to manually check each subscription to figure out when it auto-renews and how much it costs, then cancel it if you do not want it any more. Some apps, such as Truebill and TrackMySubs, will do that work for you but they often come with a fee, Ms Fernandez says.
Letting go of a subscription can be especially difficult when it is tied to the way you see yourself, such as a fitness-related subscription, says Bobbi Rebell, host of the Money tips for financial grownups podcast.
“You want to be the person who uses them, so you don’t want to cancel them. It is an admission of failure,” she says. To combat that tendency, she suggests cancelling those subscriptions that you have not used in the past month, then adding them back sparingly.
Be careful when signing up for free trials
“Have a high standard for when you are signing up for a free trial,” Ms Baggerly says, and be sure to put a note on your calendar ahead of the auto-renew date so you have time to cancel.
Remembering to cancel can be especially challenging with annual subscriptions, since the renewal date is so far in the future.
Ms Baggerly signed up for a geocaching app that her family used a handful of times, then forgot to cancel, only to be surprised by the renewal charge a year later. If you just miss the cut-off, she suggests calling and asking for a refund, which many companies will provide.
Ira Rheingold, executive director of the National Association of Consumer Advocates, says that as companies become more sophisticated in their marketing around subscriptions, many are using what is called a “negative option”, where the consumer will be charged a recurring fee unless they specifically opt out.
As a result, many consumers might not realise they are signing up for a subscription at all. If you use a credit card, he says, you can also enlist the support of your card issuer by disputing a charge if you did not agree to it.
As for Ms Pekkanen, while she eventually cancelled her educational subscription, she says she learnt her lesson: now, she is "really wary of free trials”.
