The subscription economy has grown by more than 350% 1 in seven years, with hundreds of new services demanding our attention and, more importantly, our bank details. How can you keep track of those monthly payments?
By Amy McDonnell
With 82% 2 of adult Brits subscribed to at least one service, it’s likely you get a monthly goodie box delivered to your door or use streaming services such as Spotify and Netflix. Even technology companies such as Microsoft and Adobe have caught on and now only offer subscription-based models for computer software like Word and Photoshop.
But with so many goods on offer and free trials to try, you might have a few subscriptions you don’t remember signing up to.
An appeal of modern subscription services is the “no fee, cancel whenever” promise, meaning you’re not tied into a restrictive contract.
Previously, many contracts made you commit to a service or product for a fixed period. This meant that cancelling could be a headache thanks to the small print.
Today’s flexible subscription business models allow greater control over your finances.
The pros and cons
Subscription economy allows more people to access services and products that were previously hidden behind lump sums. But although £5.99 or so a month might not seem like much, those prices add up.
According to Whistl 3, the average spend on delivery subscriptions is around £60 a year. That doesn’t include the 40% 4 of UK households with at least one streaming subscription.
Here are a few problems you should be wary of:
You may have signed up for a service at £9.99 a month, but most companies have clauses in their terms and conditions that allow them to increase their prices at any time.
For example, Netflix increased its monthly Premium package by £2 in May 2019 5, equating to a £24 annual hike in price.
Regularly check your direct debits and emails for updates to avoid paying more than you can afford.
Paying your insurance monthly usually comes with a slight increase in your overall premium, meaning those who can’t afford the annual lump sum are penalised with monthly interest costs.
The annual percentage rate (APR) varies between companies, but Which? 6 reported that some insurance firms charge up to 40% extra to pay car insurance monthly.
We recently launched AvivaPlus, the first insurance-based pay monthly service. It allows customers to pay monthly for car and home insurance with no added interest and to cancel or change their cover at any time with no admin fees.
It’s uncommon for modern subscription services to charge you a cancellation fee, but some still exist.
Utility services, gym memberships and insurance premiums are often the main culprits of exit fees. It’s not all bad news though as some traditional companies are breaking the status quo and removing exit fees.
Read the cancellation policy before signing any contract to avoid any unexpected fees.
Nearly half of Brits 7 are signed up to services they forgot about or were unable to cancel, equalling £800m a year in ‘accidental’ costs.
Many companies send emails when your free trial is coming to an end or your subscription is up for renewal.
AvivaPlus Car Insurance
Pay monthly, interest free. Insurance the way it should be
However, unchecked email addresses or messages ending up in the spam folder can leave you out of pocket.
Checking your subscriptions
It can be a good idea to take some time to search for and note down, all the services you’re currently paying for in a spreadsheet, word document or a notepad.
This way, it’ll be easier to decide what to bin and what to keep.
Audit your bank statement and emails
The first place to check for subscriptions is your bank statement, as this is where payments should be coming from.
It can be daunting, so start by filtering your bank statement to the past month. Then, note down the service and price of all outgoings, including those you already knew about.
You can also increase this to six months or a year to catch any subscriptions that aren’t paid monthly.
Most services email you before a recurring payment is scheduled to come out. You can search your emails using words like “free trial”, “payments” or “subscriptions” to retrieve forgotten subscriptions.
Checking your bank statement and emails should give you an overall view of your subscriptions, but some payments may not explicitly state which company is charging them.
This is likely happening because you’re using third party payment services.
Track your app store
If you’ve subscribed to newspapers or mobile apps, they’re potentially managed by your mobile phone’s app store.
You can review these quickly to pick up anything you didn’t catch from auditing your bank statement and emails.
If you’re an iPhone or iPad user, go to your device settings, tap your name and click Subscriptions. Here, you’ll be able to view any subscriptions handled by Apple and Apple Music.
You can cancel any unwanted subscriptions on this screen by clicking Cancel subscription.
Head to the Google Play app to manage subscriptions on your Android device. Once opened, click the three horizontal lines in the top left-hand corner and then tap Subscriptions.
You can cancel them here too. If in doubt, check with your phone provider for full instructions.
PayPal payments come from your assigned bank account; however, it won’t show up in your direct debits and may just appear as ‘PayPal’ on your bank statement.
It’s popular to pay online streaming services like Spotify and Netflix with PayPal, so it’s worth double-checking.
If you have a PayPal account, you can view and manage any subscriptions in your account settings by clicking Payments > Manage your pre-approved payments.
How to cancel your subscriptions
Once you’ve prepared your subscriptions list, you can start deciding which payments you want to keep and those you can do without.
There might be some apparent services that you don’t use anymore, whereas others may be a little greyer.
Instead of cancelling, you can check whether downgrading a service can save you money.
For example, if you pay for Netflix’s Premium package, but don’t use more than two screens at once, you can swap to the Standard package and save £36 annually.
Remember, the goal isn’t to cancel everything. If you’re happy with the service and can afford the monthly payments – keep it.