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Money leaks: Canceling unused memberships

How to figure out if your monthly or annual membership fees still make sense in your budget.

By MSN Money Partner Jun 21, 2011 11:06AM

This post comes from Jim Wang at partner blog Bargaineering.


How many memberships do you have? How many of those do you use often enough to justify the fees? When was the last time you sat down and took a long look at what you were paying and whether it was still worth it? If it's been awhile, now's a pretty good time to do it.


The classic unused membership is, of course, the gym membership. For the month or so after New Year's Day, our gym is absolutely packed with people looking to achieve their resolutions. The influx of new people only lasts about a month or two before it goes back to its pre-New Year's resolution levels.


While the people may no longer be going, their money continues to go to the gym since gyms know about this behavior. That's why gyms will always have membership contracts. They are quite sneaky. 


So, how do you go about trimming unused memberships, especially if you are locked in? (This post is an installment of our new Money Leaks series.)

How often do you use it?

The key to determining if you use your membership is keeping a log. Keep a journal of how often you use the service, whether it's a Costco membership or a gym membership, and decide whether you could save money by going somewhere else or by paying each time (if that's an option).


Let's say I go to Costco once a week to buy groceries and the membership costs me $50 a year -- or less than $1 a week. If I can save more than a dollar per trip over my grocery store, then the membership is worth it.


The easiest one to calculate is the gym. If I pay $30 a month for my gym (it's a county gym that's partially subsidized by property taxes, so, yes, it's quite affordable) and I go once a week, I'm paying about $6 or $7 a visit. If I go twice a week, that's $3 or $4. If I visit three times, it's just $2 a trip. So after I account for summers (when I go less frequently), I can decide whether or not it's worth it for me to continue being a member.


Investigate early termination

This tip is a two-parter. First, before you ever sign a contract, figure out what the early-termination fees may be. Some contracts don't have one; they simply won't let you cancel it (which makes the early-termination fee the remaining balance of the contract). Be careful about how much you commit yourself to, especially if you don't know how often you'll use it.

Second, decide if canceling the contract early will end up saving you money. Let's say you have 24 months left on a $50-a-month contract with a $150 termination fee. If you feel that the membership isn't worth it, it's only costing you three months of bills to cancel the contract. That $150 seems like a lot of money, and it is, but it's cheap compared with continuing to pay $50 a month for two more years on something you won't use (which, by the way, is $1,200 in payments).


Finally, if you can't cancel it, make sure it isn't on auto-renew. 


So, take a look at your memberships and decide whether they are all still worth it.


More on Bargaineering and MSN Money:



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