These sneaky charges amount to more than $14 billion on consumers' credit cards in a year. Are they popping up on your bills?
This post comes from Shelby Bremer at partner site Credit.com.
If you don’t check your credit card statement every month, you may be racking up hidden credit card charges without even realizing it.
According to a study released last month by software company BillGuard and research firm Aite Group, there are roughly 233 million hidden credit card charges each year.
Of the 5,000 participants in the study, 35 percent were affected by hidden charges, and the costs associated with them were an estimated $14.3 billion in 2012 alone. BillGuard’s software is designed to identify what they’ve named “grey charges.”
Here are the biggest hidden drains on your wallet, according to the study:
Free-to-paid charges take the top spot by a landslide, racking up 115.2 million transactions annually. This grey charge occurs when a consumer receives goods or services free during a trial period, but doesn’t actively cancel the service, resulting in a charge at the end of the trial. These kinds of charges rack up $6.13 billion annually for retailers, at an average of $53 per charge found in the study.
Have you ever bought anything, only to receive an added bonus, perhaps a different product or service than what you intended to buy? That offer may come from a completely different seller, and could result in a phantom charge. Phantom charges make up the second largest grey charge category in both transactions and value, with 42.6 million separate occurrences resulting in nearly $2.6 billion annually.
3. Unintended subscription
Unintended subscription fees are just what they sound like. Oftentimes when a consumer completes a transaction, that person believes it’s just a one-time payment. But when that one-time sale turns into an unwanted, ongoing subscription, the fees can really add up. Unintended subscription charges come in third in transactions, with 15.4 million annually, and fifth in dollar value, racking up $707 million each year.
The bane of any sane consumer, the zombie charge is a charge that just won’t quit. If you’ve ever had a subscription service that you’ve canceled over and over again, to see that charge continue to pop up, then you understand the frustration of a zombie charge. Zombie charges are fourth in occurrences, with 11.9 million each year, costing an annual total of $826.6 million.
5. Service and luxury fees
The fifth largest category of grey charges is that of service and luxury fees, which are often charged without a consumer even realizing what’s happening. Perhaps you’re paying extra money for a special kind of credit card, or for a service commonly thought to be free like a bank account. These could also be service fees charged by a company when a customer makes a special request. These charges happen 7.7 million times per year, but each instance is a bit more costly than the other types of charges. By monetary value, service and luxury fees rank third, costing consumers $997.9 million each year. In the study, these charges cost individual consumers an average of $129.
These charges are spread throughout all credit card companies and all cardholders, and technically, they’re legal. So be vigilant in checking your statements frequently, know the terms of service before signing up for any free trials, and be persistent in reporting and pursuing unknown charges. You’ll save yourself quite a bit of money if you do.
More on Credit.com:
- The First Thing to Do Before Applying for a Credit Card
- 10 Common Credit Card Complaints
- How to Live Within Your Means on Credit Cards