How much do you waste with overlooked charges?

iStock 000009487570Medium-73How much money are you losing to unnecessary charges you’ve forgotten about? If you’re anything like many Americans, the answer falls somewhere between “some” and “a lot”. Here’s what you need to know about these overlooked charges and how to keep them from spoiling your finances in the coming year.

These so-called grey charges are recurring fees that you’ve either forgotten about or didn’t even realise you were paying. Some of these come from simple errors, like neglecting to cancel that gym membership you never got around to using. Others come from nastier sources, like companies that intentionally make it difficult to cancel services.

By definition, grey charges are generally small enough to slide into the background noise of a cheque account. Anything expensive stands out and gets taken care of, but $20 here and $30 there is easy to overlook. Over time, this can really add up. And what a waste. This is money spent on something you either don’t want or aren’t getting, but approximately 66.5 million Americans pay it.
The first step in dealing with grey charges is to review your bank statement on a monthly basis. This is a good habit anyway. It lets you track your spending and regularly check for fraud, but it also lets you see if you actually use everything for which you’ve paid. Why check once a month? Because that’s the standard billing cycle for most services; if there’s a recurring charge on your bank account, it’ll probably show up every 30 days.

There are five common types of grey charges to look out for on a bank statement:

1.Stale memberships. Old fees for services you no longer use. They can include that gym you stopped going to last February, or a website you haven’t read in months.

2.Unintended subscriptions. A one-off purchase that transforms itself into an ongoing one. Examples can include software that comes bundled with an automatic subscription service, or downloading an app that includes hidden costs.

3.Free-to-paid. Free trials that automatically become paid subscriptions. Magazines do this all the time, as does just about any product advertised on late night TV. In fact, this holds true for most advertised free trials.

4.Echoes. Charges for a follow-up product or service that arrive after an initial purchase. They’re why Apple now prompts you to download apps with the word “Get” instead of “Free.” Cell phone downloads like ringtones and app upgrades are also notorious for this.

5.Zombies. Services and subscriptions that don’t end even after cancellation. Examples could be when your alarm monitoring company or TV subscription company “forgets” to disconnect your service; they’re charging a zombie fee.

Free-to-paid is one of the most common ways to get stuck with grey charges, because consumers don’t always realise when a free trial will turn into a paid subscription. These alone account for $6 billion of the $14 billion Americans overpaid last year.

“Carefully read the terms and conditions before signing up for a service,” said Betty Riess, a spokesperson for Bank of America. “And be sure you have a full understanding of policies and your responsibilities. Review your monthly statement and contact a merchant directly if you question a charge.”

Once you spot these pesky charges eating away at your money, the next step is cleaning up your account. For most grey charges, that’s as easy as calling to cancel. More unscrupulous companies require a heavier hand. If you’ve got any doubts, call back to confirm and ask for a follow-up by letter or email. That’ll come in handy if those charges show up again and you need to dispute them or request your credit card to stop payment.

Don’t be afraid to dispute charges either, because every now and again a company won’t back down. In cases of duplicate charges, overbilling, or refusal to honour cancellation requests, have the charge cancelled or reversed.

Practicing good financial hygiene is important, and the New Year is the perfect time to start with fresh habits. It can save you a surprising amount of money over the long run, and unlike budgeting or debt management, eliminating grey charges requires no tough decisions. It’s money that’s just flying out the window. This year, make a resolution to keep it in your pocket.