Automatic payments from your bank account can be a great convenience, but they can also be a source of problems if you don't pay attention. Do you check your payments on every bank statement? If not, you may be paying incorrect amounts or making automatic payments for a service or subscription that you don't want and didn't realize that you had.
According to a recent survey conducted by CreditCards.com, 35% of respondents had created an account that resulted in an automatic payment without the consumer realizing that this payment was required. Think of your New Year's resolution fitness center membership that lasted about three weeks, a forgotten free trial of a content streaming service that you didn't like, or your magazine subscription that automatically renews past its original term.
In cases like this, consumers can sign up without realizing that the default option is automatic renewal, otherwise known as a negative option – you have to make an effort to cancel the service. Almost half of the unexpected automatic payments in the survey were the result of accepting a free trial and forgetting to cancel the service. Cancellation would have been the preferred option for all but 9% of those people.
Younger consumers tend to fall for unwanted recurring payments more than the oldest consumers do. Only 17% of the Silent Generation (ages 72 and above) had signed up for an automatic payment without understanding that they had done so. Generation X members had the highest rate of automatic payments at 44% and were also the most likely to call automatic payments "very difficult" to stop. Millennials were a bit more cautious at a 37% rate of automatic payments, but still prone to acquiring unexpected payments.
According to the survey, automatic payment negligence is one of those rare items where a lower income works to your advantage. Survey respondents making less than $30,000 per year were less likely to get stuck with recurring charges than those with higher incomes. This makes sense – if you have limited resources, you are more likely to keep track of them. You can't afford any extraneous recurring charges.
Congress may get involved through the proposed Unsubscribe Act, which would better define negative options, make it easier for consumers to cancel them, and give the Federal Trade Commission (FTC) the necessary enforcement tools. However, there has been no action since the Unsubscribe Act was introduced in February. It's up to you to do your own due diligence.
The CreditCards.com survey drives home the importance of checking your bank statements regularly as part of your budgeting regimen. If you never check your bank statement, you never notice renewal charges – especially annual ones that are the type you are most likely to forget.
It's wise to check your bank statements not just monthly, but regularly throughout the month. Generally, you can check your up-to-date postings through your credit card issuer's website or mobile app. You may find concerns other than forgotten automatic payments, such as unexplained or fraudulent charges. The sooner you discover all these errors, the more likely it is that you can correct them with minimal damage to your finances. If you would like to monitor your credit to prevent identity theft and see your credit reports and scores, check out our credit monitoring service.
Meanwhile, when you accept the next free trial offer or start a new membership – like your usual post-New-Year's gym membership – write a note to yourself and place it in a prominent location. You have a better chance of remembering the automatic payment, and what it was for. Maybe you'll even remember to go to the gym occasionally.
If you want more credit, check out MoneyTips' list of credit card offers.
Originally Posted at: https://www.moneytips.com/check-your-bank-statements/104