How to manage recurring payments, subscriptions made on your debit, credit card
Knowing how to stop automatic payments on your cards is crucial to your savings
Dubai: Nothing can be more frustrating than being charged for a subscription service that you’ve previously canceled. So while recurring payments or automated debits can be a boon for businesses and customers alike, they can also turn wreak havoc on your finances when mismanaged.
“It’s so easy to sign up for a subscription service as many subscription services offer a trial or introductory period to entice new customers to try the product, usually at a deep discount and sometimes for free,” said Mohammed Shaan, a Dubai-based personal finance planner and advisor.
“But be wary if you have to link your debit or credit card as this can only ultimately work out well for the service, as it’s counting on you to sign-up with a credit card, set your account to auto-pay and then forget to cancel.”
Be wary if you have to link your debit or credit card as this can only ultimately work out well for the service, as it’s counting on you to sign-up with a credit card, set your account to auto-pay and then forget to cancel
Are subscriptions easy to cancel?
While it's usually pretty quick and easy to cancel online subscription services that you no longer want as many companies have flexible policies that enable you to cancel at any time, the process of canceling your subscription will depend on the company you’re working with.
“While automatic payments are a convenient way to pay for bills and different services, you may need to sometimes pause payments or stop them altogether because you no longer need or want to use a service, or because you need to take a break for whatever reason,” added Shaan.
“As long as you manage the debt responsibly and are not charging more than you afford to repay each month, setting up automatic bill payments for subscription services is one way to ensure that you never miss a payment deadline for those services.”
Do you need all your subscriptions?
If you have several of the same types of subscriptions, it’s worth taking the time to prioritise, financial planners reiterate. For example, do you need five streaming services, or three types of meal subscriptions each month?
“Taking an inventory of what subscriptions offer you the most value for the cost and decide that way if it is something that you can comfortably afford,” said Mirin Raul, a Dubai-based personal finance counsellor, who coaches those with issues tracking expenses and liabilities.
“Additionally, pricing of subscription services aren’t static as prices change. And generally speaking, when they change, they’re not usually getting any cheaper. You need to monitor this, because if the price goes up, you might not be auto-paying the correct amount anymore.”
How to track your subscriptions
If you don’t have the time to track down all the different services you’ve got on auto-pay, there are subscription tracking applications. There are apps where you can link your credit card and bank account, and it will scan your bills for anything recurring charges.
Seeing all your subscriptions in one place can help you decide what’s most important, and for an additional fee, these apps will take steps to cancel the subscriptions you don’t want. While it can be time-consuming, taking the time to cancel what you don’t need can save you in the long run.
“Even if you don’t want to pay for a subscription tracking service, it’s worth taking the time every few months to review what you’ve signed up for and take the time to cancel any you’re not using regularly,” added Raul.
1. Cancel your subscription with the company directly by requesting a cancellation via email or phone. If this doesn't work, you should contact your bank or card company online or by phone to cancel the payment.
2. You should request a cancellation this at least three days before the next scheduled payment to avoid having another amount charged. If further payments are taken after you requested a cancellation, in most cases, the bank refunds them.
3. Your cancellation request should be approved as long as you don’t break your contract with your provider. If you have signed a minimum contract or an agreement that doesn't allow you to cancel your subscription early, you'll likely need to pay your outstanding balance.
Bottom-line?
While it’s convenient to set up automatic payments for subscription services, what if you stop using these services or aren’t getting your money’s worth? If you lose track of what you’re paying for each month, you could end up losing money for no good reason.
An international survey from global auditing giant Deloitte found that 46 per cent of people who used streaming services had canceled at least one of them in the previous six months, and 43 per cent canceled on the same day they decided they didn’t want the service.
So when it comes to tracking your subscriptions, it’s a best practice to set up a reminder anytime you sign up for a new subscription service so you can cancel it before your free trial ends as well as keep track of the date it will show up on your monthly bill if you want to cancel it in the future.
The bottom line is while auto pay works well for fixed subscription payments, as it is with most subscriptions, it can be dangerous for subscription amounts that fluctuate. If you’re hit with an unexpectedly high bill for a certain subscription service, it can drain your account in an instant.