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July 27, 2015

Are You Losing Money with Auto-Renewals and Free Trials?

Simple. Thrifty. Living.

Free trials aren’t always as free as they seem. Subscriptions that automatically renew, trial programs that convert to full-time (at full rates), and other marketing tricks could be costing you. A free pass to Amazon Prime sounds great — until you realize you’ll be charged $99 after the first month! Amazon isn’t alone in doing this, and by searching out these sneaky fees and all-too-common marketing tactics, you can trim your annual expenses.

If you need to sign up for a special “membership” club to receive a discount, make sure it doesn’t come with an automatically renewing membership. Amazon Prime and their “clubs” for moms and college students offer free trials, but automatically bill you the full annual rate after the trial period.

Anything you sign up for has the potential of offering a “convenient” rollover to a paid membership after a set period. Barnes & Noble, Starbucks, and AMC theaters all rolled out paid membership “deals” in the past few years. Make sure you know all the terms before taking a costly plunge.

Even plans that are a good deal may not renew at an expected rate. Check any annual or automatic renewals and make sure you are being charged the correct amount. Magazine and newspaper subscriptions are the biggest offenders here – that $4.99 subscription may leap to $29.99 the second year. Credit card companies do this as well, slipping a sneaky “annual fee” onto your account and hoping you don’t notice.

Avoiding opting into auto renewals allows you to better track where your money is going. A company that can simply charge your credit card to renew has no incentive to offer a better deal. Let your subscription come close to lapsing, and the special offers will probably pour in as the business attempts to woo you back.

Any time you sign up for a “free trial” or enter your PayPal or credit card information, reading the fine print can help you avoid a nasty shock. For example, users signing up to review their credit reports for free are often shocked to be billed $99, $129, or even $199 when that free trial ends.

Carefully reviewing your existing subscriptions and memberships and knowing exactly what you’re paying for can help you avoid these common but subtle money-wasters. The marketing experts at these corporations know you’re more likely to keep handing over money each month if they require you to take action to cancel. Stop them in their tracks by watching out for renewals, annual fees, and free trials that aren’t really free at all.

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