A few months ago, I signed up for a free one-month trial of Netflix. I decided later that I would cancel it at the end of the month because I barely used it. But then I got busy and completely forgot about it - or I did until I saw the charge on my credit card for the next month. Now, $7.99 isn’t a lot of money, but if you’re like me, you hate seeing your money wasted. You don’t go to the grocery store and leave an extra $10 or $15 at the till, so why do we let so called "grey" charges remain on our credit cards for months or even years?
What are grey charges?
Grey charges are the recurring payments that creep onto your credit card or bank account without you noticing. They’re subscriptions that you thought expired years ago but which actually auto-renewed. They’re free trials that converted to monthly fees. They’re basically any recurring charges that you don’t know about, forgot about, or would cancel if you could easily do so.
How many do you have?
I bet you that most people reading this article have at least one grey charge on their cards right now.
While the statistics aren’t readily available for Canada, in the U.S., a 2013 study by Aite Group found that consumers there pay for 233 million grey charges every year which adds up to $14.3 billion. I was lucky that I checked my credit card statement that month. I quickly cancelled my Netflix subscription the day I noticed it. But that $7.99 was a good reminder to check my statement every month.
Why are grey charges such a big problem?
Because so many people don't check their credit cards closely every month, these kinds of relatively small charges can remain there for months or even years before they’re noticed.
Companies who operate business models with recurring payments are often counting on many consumers not paying attention to their credit card bills and not noticing these charges. Some companies actually actively make it difficult to cancel a recurring payment or even add subscriptions to your purchase that are hard for you to notice or see.
What can you do to prevent them?
One key way to prevent grey charges and make them easier to dispute is to use your credit card for all recurring payments.
Credit card charges are much easier to dispute and cancel than charges connected with your bank account. Other ways to prevent grey charges depend on what kinds of grey charges they are.
Common types of grey charges
Free Trials: A large proportion of grey charges come from free trials. Most people sign up and then forget that at the end of the month their card will be charged if they don’t cancel. To prevent these types of grey charges, try to avoid signing up for free trials that require your credit card. If you can’t avoid doing so, be sure to make a note in your calendar to remind yourself to cancel the trial before you’re charged. It’s best to make this note at the time of purchase since some companies purposefully make it difficult for consumers to check the renewal date.
Automatic Renewals: Another common type of grey charge is automatic renewals after fixed-term purchases. Many consumers don't realize that most gyms include automatic renewals in the fine print of their contracts when you purchase a one-year gym membership. The best way to combat these types of grey charges is to read the fine print. If the fine print is too extensive, then ask a customer service representative if the membership is auto-renewed. Often they can remove the auto-renew provision. Even if they can’t, you can make a note in your calendar to cancel the membership before you’re charged for another year.
Phantom Purchases: Some companies will add on subscriptions or other purchases when you pay for something else online. These are called phantom purchases and one common example is when you purchase a credit report online and you’re signed up for a monthly credit monitoring service. The webpages are often design so that it's hard to opt out of these additional purchases or subscriptions. The best way to combat these charges is to pay close attention to the checkout pages when you make a purchase online, especially any pre-checked boxes since that’s where these additional charges often originate from.
Zombie Charges: These are the worst form of grey charges because they’re for services or subscriptions that you have already cancelled. Sometimes the company accidentally charges your card, but other times the charges are purposely left by dishonest companies who hope that you won’t notice. If you notice a zombie charge, you should call the company and let them know. Ask them to cancel the charges and refund your money. Be sure to document the phone call and ask for the cancellation confirmation in writing. If the charges still appear, contact your credit card company and dispute the charges.
How to get rid of grey charges
The most important thing to do to get rid of grey charges is to check your credit card statement regularly.
It only takes a few minutes to closely look through and investigate grey charges and it could potentially save you hundreds of dollars each year.
