12/9/2013 4:00 PM ET|
How 'gray charges' cost you dearly
They can nickel and dime you to death, and often you don't know you're paying them for a long time. Here's how to be aware of so-called gray charges -- and how to dodge them.
Chances are you're being hit with gray charges and you have no idea. To make matters worse, by the time you realize their presence on your credit card statement, you've already been charged for a few months or more.
After getting past the initial frustration that your account has been siphoned, you must now spend time trying to reverse or cancel the account to avoid further charges. This is often time consuming and frustrating, not to mention costly.
The average consumer may be tempted to ignore the charges, but removing and stopping the charges should be a priority. Here's everything you need to know about gray charges.
What are gray charges?
gray charges can be found in (but not limited to) magazine and online game subscriptions, automatic renewals and free services that switched to premium paid services without your knowledge. Essentially, gray charges are charges that end up on your credit card statement without your knowledge or due to businesses using less than forthright tactics. Some companies use every trick to find their way on your credit card statement because they're banking on the fact that you're not paying attention during the sign-up process.
Sources of gray charges
The most notorious source of gray charges is the free trials that require your credit card for the trial. Well, if it's free, why do you need a credit card to sign up? This is because it is ultimately not free, and these companies don't want to miss a dollar should you forget to discontinue the service after the trial period is over. The trial is what gets you in the door and them on to your credit card bill every month. Securing your credit card information upfront ensures companies a consistent stream of subscription fees at your expense.
Other sources of gray charges include the following:
- Ghost subscriptions: Subscriptions you sign up for while completing a separate purchase during checkout.
- Nuisance charges: Charges you may have cancelled previously only to find that they are back on your credit card statement.
- Ghost renewals: While signing up for a subscription or trial period, the business purposely hides or does not display the renewal date in hopes of charging you unknowingly later on.
- Freemium (free) to premium (paid): A company doesn't expressly tell you when the freemium period ends or how much you will be charged.
- Cost creep: The initial cost for a service or product increases after a few months without your knowledge and, in some cases, your consent.
- Money-back guarantees: You order a product, are less than thrilled upon its arrival, but neglect to return it. Your account then continues to get charged until you do so.
How much are gray charges costing you?
Believe it or not, they can cost the average consumer $215 to $350 per year. On a monthly basis it may not seem like much, but over time, this adds up – especially when it happens across several credit card accounts.
In 2012 alone, gray charges cost U.S. credit and debit cardholders $14.3 billion, according to a study by the personal finance security service BillGuard. As you can see, this is a lucrative business practice at your expense. Seems sleazy, right? Without a doubt the practice is less than scrupulous, but in most cases, it is legal. Therefore it is up to you to become vigilant when signing up for a subscription or completing a purchase online.
How to avoid gray charges
Gray charges often happen because consumers aren't paying attention when making a purchase. Companies depend on your lackadaisical attitude toward your money in order to show up on your credit card statement unbeknownst to you. You can combat these charges by being mindful and monitoring your purchases via your credit card statements on a monthly basis. Ask questions and read the fine print before going through with the transaction. Check your credit card statements and dispute the charges when necessary. Your credit card company will often reverse the charges if you can prove that you did not consent to the charges on a recurring basis.
Getting rid of them
Call the customer service number and discuss the charges with the representative. Ask them to show you where you agreed to the charges, and if they aren't able to do so, politely ask for a refund. If that doesn't work, then file a complaint with your credit card company.
More from U.S. News & World Report:
VIDEO ON MSN MONEY
I am not so much concerned about the nickel & dime "grey Charges" on my billing statements, I am much more concerned and upset about the truck load of government taxes, fees and regulations that add substantial $$$ to my bills, not just nickels and dimes. Have you analyzed your phone bills lately? If it were not for greedy big government. our utility bills would be 1/3 less than what they are. Credit card statement are no different. The cost of regulatory compliance and taxes are added into the cost of the statements and factored into the interest rates.
The big difference is I can cancel my credit card of my own free will, unfortunately we cannot cancel the horrendous government charges.
It amazes me that the practice of "Gray Charges" are legal. It is obvious to anyone that we only wish to purchase what we sign up for. Any add-ons should be only with our expressed knowledge and willingness to accept. Any transaction should be limited to the product or service we signed up for initially. If it is a trial period, it should end and we should have to fill out an additional form with our expressed permission to continue beyond the trial.
This is the type of unscrupulous trickery within our commerce continues to victimize millions of people. If this isn't a red flag that should be addressed with legislation, then what is? Who are the people profiting from this practice? And why are they allowed to continue with impunity? We should all be asking these questions. And fire those we have elected who are unwilling to change this practice.
I used to get calls for "free" magazine subcriptions and they would always ask for my credit card number. "If it's free, why do you need that information?"
"We need to verify a few things."
"Like what? If it's free, you don't need my credit card."
Then they would get mad like I had offended them by not trusting their unsolicited sales pitch: "just give me your credit card number and you'll get the damn magazines!"
If it were not for "the big greedy government" you wouldn't be able to afford phone serivce because the cost of maintainig the infrastructure for Telephone, Satellite and Fiber Optic/Data Connections would fall entirely on the consumer---especially in rural areas.
You migt not use every single service you pay for, but the cost of a connected civilized society includes investing in infrastructure. I'll continue paying those taxes because its the right thing to do.
The systematic relaxation of regulations and compliance is what got us into the financial mess, so even though it causes more work for me in the financial services sector, I'd rather complain about the paperwork and have a functioning system than financial chaos. Obviously your example and my response are gross simplifications of a multi faceted issue. Stop whining and pay your taxes.
Dumb article most people don't have$215 to $350 charges they unaware of
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
RECENT ARTICLES ON CREDIT CARDS
You can give your car the care it needs without draining your bank account if you follow this advice.