As we do our holiday shopping this year, there is more to worry about than finding the perfect gift or getting the best deal- we need to also be on the lookout for grey charges! These sneaky fees are costing one in three consumers hundreds of dollars a year- and the holiday shopping season is a great time to find new victims!
Local financial professional Jerry Skrzycki from Lighthouse Investment Planning is here to explain what grey charges are and what we should all be looking out for this buying season!
Q: What are grey charges?
A: This is a new and growing trend of sneaky, unwanted, but completely legal fees that are catching many consumers by surprise. Companies know that people are busy and don't have time to read every page of the disclosure. These grey charges are buried in the fine print. So they are completely legal- but can end up costing consumers hundreds of dollars a year. ($215 per year per person according to a report from BillGuard.com <https://www.billguard.com/greycharges>)
Q: What do people need to look out for?
A: There are five types of grey charges:
1. Unknown Subscriptions: This is one to look out for, especially when shopping online- another offer or discount at checkout. You usually have to click or unclick the box. Be careful- if you don't read the fine print you could be agreeing to another purchase!
2. Zombie Subscriptions: You cancel a subscription, let's say a magazine subscription or gym membership and you aren't being charged for a few months - but then a few months later, it's back from the dead and you are being charged again. It's usually an oversight or mistake on the part of the company, but unless you catch it and point it out, you're giving your money away without getting anything for it.
3. Auto-Renewals: This occurs when you sign up for a service that bills you monthly or quarterly. Some retailers will not contact you before each payment is due- simply charging your card and sticking you with the charge because you were "too late".
4. Free to Paid: Warning!! When you are getting something for free and you have to cough up your credit card, there is usually a catch! It may be free for a trial before it converts into a permanent subscription. This is the most common type of grey charge out there!
5. Cost Creep: You think you're signing up for a monthly subscription for a particular amount like $5.99, but the cost creeps up slowly each month to $6.99 or $7.99. You may not realize because the company doesn't advertise the increase each month - but it's in the fine print.
I have this information, along with some real life examples of grey charges on my website at lhtip.net <http://lhtip.net>.
Q: Why aren't more consumers aware of these charges?
A: First, because the dollar amounts are small- usually between 12 and 18 dollars a charge. But mostly because people don't really look at their credit card bills or bank statements. 9 out of 10 people say- at most- they skim their statements, mostly just looking for large purchases. That means those grey charges are slipping past you.
Q: What should consumers do to protect themselves?
A: First, pay attention! Nothing is free!
Monitor your purchases- that means really look at those credit card and debit card statements
Read the fine print
Get cancellations in writing- it will eliminate the he said-she said scenario if you need to get a refund
If you find an unknown or unauthorized charge, report it immediately
Use a credit card instead of debit card- they offer more consumer protection
Jerry Skrzycki is a financial professional with more than 30 years experience. Jerry takes a holistic approach to financial planning and understands the financial landscape is always changing. It is why he has taken more than 10 years of continuing education to ensure he has the latest information and practices to help his clients. Jerry specializes in financial planning for auto employees dealing with pensions and buyouts. Jerry is the president of Lighthouse Tax and Investment Planning in Trenton, MI. www.lhtip.net <http://www.lhtip.net>
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