This article, originally entitled "Avoid blind cash drain – how to control renewals," comes from partner site SavingsAngel.com.
Nearly endless services, memberships, and subscriptions have the option for automatic renewal these days. So much so that some states are pursuing stricter guidelines and limitations for a wide variety of businesses that employ automatic renewals – everything from magazine subscriptions to gym memberships.
I personally like automatic renewals because they help me continue paying for things I want to stay active without me even needing to think about them. That is, I like them until I continue to pay for things I don't want because I forgot all about the renewals. If this has happened to you, here's how you can avoid blind cash drain and control renewals.
(1) Read the (sometimes) fine print.
In our modern society, we are presented with agreements all the time – privacy policies, membership agreements, site use terms and conditions, and more. Don't just sign or click “I agree” or “I accept” without reading them. I know it can be tedious but when it comes to anything you pay money for, it is necessary. Contained in the agreement should be any financial obligations on your part. Be sure you understand what you're agreeing to and are good with it before continuing. This goes for everything from cell phone contracts to gym memberships to online magazine subscriptions.
(2) Don't sign something you don't understand.
You might feel silly or like you look stupid but absolutely don't sign something unless and until you fully understand how it works. When you're agreeing to pay – and you don't really know what you're paying for – it's never financially smart.
One example is the really popular misleading cell phone sales pitch of “no service contracts”. People sign them because they believe they don't have a contract at all then – and can discontinue service at any time. In comes the blind cash drain because that's only half true. While it's true you don't have a service contract, you are agreeing to a payment plan on the cell phone you're getting. Unless, of course, you pay for the phone outright. Being lured in by the monthly payment plan for the phone and you're caught paying for the service too – for the next 2 years. How? The cell phone is required to have service with them until it's paid off.
But it gets even worse if you start a phone plan online. You often cannot read all the terms and conditions until AFTER you input your personal and payment information. At the time of this writing, we discovered this tactic with Verizon Wireless. We were flat out told (and confirmed by looking everywhere) that we could not view the payment plan agreement without first beginning an order. By the time most people get to this step, whether online or in-store, they are convinced to sign without thoroughly reading the terms.
(3) Don't sign on emotion – and never take verbal assurances.
We can get overly excited and not bother to carefully read the information or ask enough questions. Like with gym memberships. You're fired up to lose weight and get in shape. So you head to a local place, take a tour, are encouraged that “you can do this!” Before you know it, you've signed up for a full year. On top of that, let's be honest that not all people are honest. There are sales people who only care about their money, not yours. They will intentionally gloss over details and view it as being your responsibility to ask questions – ones you may not even think to ask.
(4) Be on guard in any high-pressure situation.
Watch out for situations where you're pressured and frightened into recurring charges for periodic services. A couple examples are yearly furnace tune-ups and home appliance maintenance. Some companies will scare you with stories of mold and mildew flying around your house and appliances catching on fire. Don't fall for that or for the offers that give a lower rate on this service, in lieu of agreeing to annual service. And don't fall for those checks that come in the mail for $30 from the local utility companies. Cashing those signs you up for home appliance “insurance” – that isn't free.
(5) When you need to end a recurring contract, contact them directly and request cancellation.
You might not be able to get the most recent charge reversed, but you can avoid future ones. Get confirmation in writing that your request was fulfilled. If you have trouble figuring out how to contact them, look for their website. Then use the “contact us” link that is typically available at the bottom of the front site page.
(6) When starting a new contract, consider using a credit card or PayPal.
This gives you three advantages: You're more likely to notice the charges, the company doesn't have direct access to your bank account, and you can dispute charges you honestly did not agree to pay.