Are Subscriptions Saving You Money Or Making You Broke? How To Manage Recurring Bills

Like most people, Yahya Mokhtarzada doesn’t always have time to closely review his credit card statement. But about a year ago, in summer 2015, he happened to notice a $40 charge for in-flight Wi-Fi service. It stood out because he hadn’t recently taken a flight.

After a bit of digging, Mokhtarzada realized this wasn’t the first time he had been charged that fee. In fact, he had been paying $40 for the service every month for more than a year.

“There are a lot of subscriptions out there that are, unfortunately, a bit sneaky, and users don’t even know they’re paying for them,” Mokhtarzada said. The experience led him to start Truebill, a web service that aims to prevent budget leaks by helping consumers better manage their subscription services. Mokhtarzada officially launched Truebill in January 2016.

Services like Netflix and Spotify are transforming the way we consume entertainment, arguably for the better. But subscription services extend well beyond television and music streaming. It’s no longer necessary to spend time creating shopping lists or going to the store for routine purchases like razors, groceries or dog toys. With the click of a button, nearly any product you need can be delivered to your doorstep, on repeat, in perpetuity.

Recurring bills have always been a part of our monthly budgets, from utilities to housing payments to gym memberships. Now, with the help of technology and streamlined fulfillment operations, more companies are jumping on the subscription economy bandwagon. For consumers, that’s both a good thing and a bad thing.

While the convenience factor is clear, the financial benefits are sometimes murky. Recurring bills for the customer mean recurring revenue for the company, a benefit that some businesses are quick to exploit. Spending can easily get out of hand, especially if you don’st keep a close watch on your expenses each month. With new subscriptions popping up all the time, often after a free trial or seemingly one-time purchase, consumers need to be extra careful.

If that sounds like extra work, it’s because it is. Keeping up with multiple subscriptions when you go on vacation, for example, or move to a new address, is a chore. But managing the subscriptions we love, while weeding out those we don’t, may be getting easier with companies like Truebill. Another company jumping into this space is Trim. Both aim to help consumers keep track of their subscriptions.

“The funny thing about these subscriptions is that many of them are aspirational,” said Thomas Smyth, CEO of Trim. “People sign up and they intend to go to the gym, or they intend to monitor their credit score,” he added. “That intent often does not last forever, but the recurring billing cycle does.”

The average person has five recurring bills and 10 elective subscriptions, according to data from Truebill. Young adults age 18-34 are particularly likely to put their purchases on autopilot, with 87 percent paying for some sort of subscription service, according to a recent study by the Media Insight Project.

“As the number of subscriptions per person continues to go up, people run into financial inefficiency in that they are paying for subscriptions they either don’t know about, they forgot about or they just don’t want anymore, but they haven’t gotten around to canceling,” said Mokhtarzada.

The two companies take slightly different approaches to solving the same problem. Trim is focused on helping consumers save money by canceling unnecessary subscriptions, while Truebill wants to be the central place to optimize your subscriptions, helping you manage them more effectively. Both services are currently free to use as they gather users, although Trim charges a small fee to cancel subscriptions that require a phone call.

Sometimes canceling a subscription is as easy as sending an email or deleting an account, but not all companies make it that seamless. Hulu is very user-friendly, while gym memberships are notoriously difficult to cancel. That’s where having Truebill or Trim do the dirty work for you can really come in handy.

“When people realize they’ve been paying for something they don’t want, and that tends to be about 25 percent of our users, they tend to be pretty incensed,” said Mokhtarzada.

Truebill and Trim take the pain out of the cancellation process by making it a one-click process whenever possible. “It should be as easy to cancel a subscription as it is to sign up for one,” said Smyth.

These services aren’t just useful for canceling services, however. Truebill notifies users ahead of time before one of their subscriptions charges an annual fee, or when a price increase is coming.

Using Truebill or Trim to track recurring subscription services is a good way to determine if you really use everything you’re paying for each month. By keeping better track of your subscriptions, and the associated fees, you could end up saving hundreds of dollars. The average Truebill user saves $512 per year, according to the company.

Signing up for these services doesn’t mean you’ll be abandoning all your subscriptions.

As long as pricing is transparent and cancellation isn’t impossible, subscriptions can be a better way to purchase some services you already use. Over the past 18 months, according to Mokhtarzada, Truebill users have doubled the number of subscriptions they have. Trading your cable service for Netflix and HBO GO would be one example. Even though you’ll have twice as many payments, overall it will be a cheaper way to watch your favorite shows.

“We aren’t anti-subscription. I love automation, and I love convenience,” said Mokhtarzada. “It’s more about eliminating the friction and inefficiency that comes with the ever-growing number of subscriptions. If we can do that it would make it very easy to continue automating more and more of your life.”