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Living with credit

So many subscriptions, so much wasted money

Jenny Hoff

It seems like every day a new app or subscription service (such as a monthly box of you-name-it) comes out offering you something to make your life easier. The best part about these products? You can sign up for them once and never look back, as they smoothly, efficiently and (hopefully) securely charge your credit card on file for your weekly, monthly or yearly subscription.

That best part is also the worst part about these products. Sometimes when a service is so easy to pay for it can also be easy to forget. Many of them auto-renew, meaning you may continue to be billed on your credit card long after you’ve stopped using the product or service. Make the price cheap enough and you keep paying for something you never use with the optimistic outlook that one day it might come in handy.

But are subscription services really worth it? Are ease of use and subscription savings actually giving you freedom or simply stressing you out to use something you are constantly paying for?

The latter, according to a new study from Hiatus, a company that developed one of a handful of apps that help you manage and cancel your subscriptions. In a survey of more than 100 consumers, Hiatus found that 62 percent were paying for unwanted subscriptions. The reasons? Those surveyed said they either couldn’t figure out how to cancel the subscription services, didn’t know they were set for auto-renewal, or thought someday they might use the services again.

But what about subscriptions that you can’t forget about because they come in the form of a huge box delivered to your door every week — are they worth it? I had to ask myself this question when I signed up for one of the many food services on the market that makes weekly deliveries of a box of fresh ingredients, portioned out for your family needs, and a great recipe. The idea that I could make gourmet meals so easily was tempting. The fact that it was a subscription provided a sense of certainty. No longer would I wonder what to make for dinner every night – the box was my answer.

This security and simplicity, however, soon turned to panic when other events came up that stalled my gourmet ambitions and moved me one day closer to my perfectly portioned ingredients ending up uncooked and perishing in the fridge. I even started canceling plans so the food wouldn’t go to waste. Suddenly I was a prisoner of my anticipated freedom.

There are many psychological terms one can use to describe our tendency to buy subscription services and then never use the products, such as: base rate effect, planning fallacy and loss aversion. Suffice it to say, we tend to be overly optimistic in our commitment to accomplishing (sometimes impetuous) goals, and are reluctant to confront reality and stop paying for a service we don’t use. Perhaps that explains why 67 percent of people with gym memberships never use them, and also don’t cancel them.

As soon as I unsubscribed from the meal-in-a-box service, I was overcome with relief. Then I started to wonder how many other services I belong to that I just keep paying for every month and either don’t want to use or simply forget to use as I go about my daily life.

It turns out there were plenty. That Hulu subscription, upgraded to avoid commercials? I was forcing myself to watch TV shows just to not waste the money. Amazon Prime? Sure, it pays for itself if you constantly spend money ordering things online. The app that allows me to make really cool movies with the videos on my phone? The problem is I don’t have time to make videos all day. The music app that allows me to stream whatever music I want, whenever I want, for a monthly fee? Great in theory, except I never use it.

Separately these costs may be minimal, but if you add them up, it can be a substantial amount. It turns out I’m spending $60 a month for subscription services that I rarely, if ever, use. That’s $720 per year. That pays for a weekend at a resort with spa services. Or, a Caribbean cruise. Or tickets for you and five of your friends to see your favorite singer in concert.

So why not unsubscribe from those services you forgot you were even paying for and spend the money instead on a getaway you’ll remember forever? With that strategy, you won’t even need yet another app to manage your unwanted subscriptions.

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  • Maggie Iribarren

    Great article! I’ve always wondered about this and I really found this helpful.