Have you ever been charged a surprise credit card fee for your streaming service, food delivery kit, or dog food box? You have a lot of companies, according to a new survey of Bank Rates.
With more consumers using a variety of video streaming services and other subscription plans, unexpected charges on credit card bills are now commonplace. Bankrate’s survey of 2,497 U.S. adults found that half (51%) of U.S. adults who had a registered account or membership were subject to unwanted fees at some point.
These hidden fees can easily happen if you accidentally join a service, forget to cancel a free trial, or pay for auto-renewed annual membership. Such charges can go up, especially if you don’t find out right away. A survey from Chase found that 71 percent of Americans waste more than $50 a month — up to $600 a year — on unwanted subscription fees.
This happened to Ann Martin, director of operations at CreditDonkey. She signed up to join the $10-a-month makeup club without even knowing it. The product is not shipped to her home, so it takes a while to determine the fee. Martin contacted her credit card issuer and asked for the fees to be removed more recently, but stuck paying some of the older fees.
“That’s because I didn’t notice it faster, but I was very pleased with my credit card’s response to this issue,” she said.
Younger consumers hit harder by recurring charges
The poll found that Millennials and Gen Zers are the two generations that bear the brunt of the unwanted subscription fee problem. More than half of those under the age of 42 said they had handled unwanted recurring charges:
Millennials (ages 26 to 41) – 58 percent
Gen Zers (ages 18 to 25) – 57 percent
Gen Xers (ages 42 to 57) – 48 percent
Baby boom (ages 58 to 76) – 45 percent
Silent generation (aged 77 and over) – 43 percent
Why? It may be that younger consumers tend to sign up for more services with recurring fees. A recent PCMag survey of subscription services by generation found that 80% of Gen Zers subscribe to four of the five popular subscription categories: video streaming, music, food, miscellaneous (such as clothing or VPN subscriptions) and beauty/health, compared to two types for Gen Xers and one for isomerism.
The survey also found that some types of registrations are popular with Generation Zers and the younger generation than older generations — for example, game subscriptions, subscription apps, subscription boxes (BarkBox, Dollar Shave Club, Stitch Fix, etc.), food delivery, and meal kits (Green aprons, HelloFresh, etc.). But shopping subscriptions and member organizations count more Gen Xers and boomers as customers.
Bankrate’s survey found that recurring charges cause a problem at all income levels. The poll found that these fees affect nearly six in 10 (59%) of households earning $100,000 or more each year, as well as 51% of households earning $50,000 to $99,999 and 49% of households earning less than $50,000 a year.
Bankrate senior industry analyst Ted Rossman said: “Unwanted registration fees are a significant sore point for consumers.
Pandemic of unexpected registration fee increases
Rossman said video streaming services, subscription boxes, and other services with recurring charges had become popular before the COVID-19 pandemic hit, but the pandemic could have an “amplified impact” on the unexpected charging problem.
The survey found that half of consumers say they are currently enrolled in a video streaming service and 41% have membership of a shopping service such as Amazon Prime or Groupon Select. Other popular services include:
Member organizations (e.g., AAA, Costco or the gym) – 31 percent
Audio streaming (Apple Music, Spotify, etc.) – 23 percent
News (New York Times, Wall Street Journal, etc.) – 12 percent
Gaming membership (PlayStation Now, Xbox Live, etc.) – 12%
Food delivery (DoorDash DashPass, Instacart Express) – 10 percent
Among those attacked with unwanted charges, 55% have occurred before the pandemic and 45% have occurred since the COVID-19 pandemic was declared in March 2020 — a significant percentage in a much shorter time frame.
During the pandemic, many consumers signed up for food delivery services and both “online sewing classes and the like to help them get through the pandemic,” said Linda Sherry, national priority director for Consumer Action. Then, she says, many people never cancel or just forget that they signed up in the first place.
“It’s no surprise that people are paying for things they don’t want or don’t use,” she says.
Cancelling unwanted subscriptions isn’t always easy.
Joshua Browder, CEO of DoNotPay, said many companies are deliberately making it harder to unsubscribe, which helps consumers combat unwanted fees and other issues. For example, he said, Netflix has a “no-refund policy,” Hulu will take away the rest of the free trial period if you cancel early, and some gyms ask you to come in directly to cancel.
The survey found that 34% of consumers with a subscription or membership account said it was difficult to cancel or turn off automatic payments. Of these, 10% said it was difficult.
In general, older generations tend to be harder to unsubscribe. The following percentage of each generation said it was difficult or somewhat difficult to cancel subscription service or membership, the poll found:
41 percent of the boom.
33% Gen Xers
32% Gen Zers
28 percent of millennials
The good news: Visa and Mastercard have both introduced “consumer-friendly policies” that require sellers to more clearly disclose free trial terms and recurring payments as well as instructions on how to cancel, Rossman pointed out. However, not all businesses follow the rules.
How to avoid unwanted credit card charges for subscriptions
Want to avoid falling victim to unexpected registration fees? Here are five tips on how to avoid this common trap:
Follow your subscription. Sherry recommends going to “old school” and using spreadsheets or similar tools to track enrollment. Write down when and how you signed up. For example, have you purchased a live streaming subscription or in your Amazon Fire Stick or Roku? She says: “Recording this information can help you be less resentful of canceling.
Avoid the free trial trap. Sign up for a free trial? Set up a calendar alert to ping you a few days before the trial period ends. Or use a virtual credit card for a free trial, Browder recommends. You can set a custom expiration date before the free trial period ends so that the company doesn’t charge you.
Turn off auto-renewal. Have you paid for six months or a year of a service you really want, such as a weight loss plan or a meditation app? Turn off auto-renewal so you’re not surprised with the large number of months of charges coming up. You can do it in your subscription account (such as an example, Lumosity provides instructions to turn off auto-renewal.) Or you can pay with a payment service like PayPal, and then sign in to that account to turn off permissions for the future. the fees.
Use tools from your credit card issuer to manage subscriptions. Chase has introduced a new tool that allows you to easily track where your credit card information is stored. And the Capital One Eno browser extension allows you to get reminders before the free trial expires. “Start with your bank or credit card and ask what tools are available to you,” Sherry says.
Try to eliminate the fee. Got drunk? Try contacting customer service to see if the company has cleared the fee. If they refuse, contact your credit card issuer for help.
You should plan to avoid unwanted subscription fees right now as it looks like the problem will soon go away. “With streaming platforms and other subscription services continuing to grow, this will remain an important issue for quite some time,” Rossman said.