Why You’re Overpaying for Subscriptions and What You Could Save Each Month If Canceled Them
Written by
Nicole Spector
Edited by
Molly Sullivan
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Ours is a society utterly obsessed with subscription services. Just look at the numbers: Netflix, a dominator in the space, has over 260 million subscribers; Amazon Prime has over 180 million. Even pricey meal delivery services are raking it in; for example, HelloFresh has close to 7.1 million subscribers.
Based on the current momentum, it’s highly unlikely that subscription services will be going anywhere anytime soon; in fact, we can expect even more to pop up this year and beyond.
Though subscription services are oh-so convenient and, in the scope of media, among the best ways to access the content you want, they can drain your wallet. A new report by Bango found that the average American subscriber pays $924 yearly for subscriptions, which breaks down to $77 per month.
To put it bluntly: This is too much money! Let’s explore why you’re overpaying on subscription services, how much you can save every month if you canceled them and how to save on those you simply can’t go without.
Subscriptions Are Keeping You in Debt
Though Bango found that the average American spends $77 a month on subscriptions, other experts estimate the amount is much higher. Throwing so much money into subscriptions can keep you trapped in debt.
“Americans have never been more indebted than they are today, with the typical U.S. household owing about $103,000 in total consumer debt and aggregate U.S. credit card debt now totaling over $1 trillion,” said Liam Hunt, director at Sophisticated Investor. “Many Americans simply cannot afford to spend over $200 monthly on frivolous subscriptions they may not even use.”
You Could Be Saving For an Emergency
Most Americans are sorely unprepared for unexpected expenses. The money you’re tossing at subscriptions (be it $77 or $200, on average) could be going toward an emergency fund — even if you only pause them temporarily.
“By cutting out subscriptions for 5 months, the typical American household could build an emergency fund that could prevent them from taking on more costly debt to cover unforeseen expenses,” Hunt said.
Consolidate Your Entertainment Into One Streaming Service at a Time
Though overpaying for subscriptions is a real problem, the solution (canceling them all) may not be realistic, you can probably cancel at least one, if not more. You could even alternate.
“Instead of paying for Netflix, Hulu, Disney+ and HBO Max, consider paying for only one of these services,” Hunt said. “Once you have exhausted the options available on your platform of choice, end your subscription and sign up for a different service. In essence, subscribe to services one at a time, without signing up for new streaming platforms without first canceling one.”
Hunt added that even cutting back on subscriptions to just two or three a month would save a family about $150, on average, per month.
Study Your Budget and Ask Which Subscriptions Are Necessary
So, you know how when you budget you have to separate needs from wants? Take this same approach when assessing whether or not you “need” any given subscription.
“It’s important to closely examine your subscriptions and ask yourself questions like, ‘Am I watching TV shows and movies on all my streaming services, or just a few?’; “Do I need daily updates from multiple news outlets?’; ‘Am I going to the gym often, or could I do a similar workout at home?'”
Tap Into Your Local Library
Don’t forget the national treasure that is your local library. You can access so much content by tapping it.
“You can stream videos (TV shows, movies, etc.) through your local library’s digital platform for free,” said budgeting expert Andrea Woroch. “You just need a library card.”
When Your Subscription Service Raises Prices, Call Them — You Could Get a Discount
Subscription service companies have a sneaky way of raising prices seemingly on a whim. When this happens, don’t just let it go. Take action.
“I contact my various subscriptions annually or whenever they try to increase my cost and ask for a discount for the following year,” said Bob Chitrathorn CPFA, CFO and VP of wealth planning at Simplified Wealth Management.
“They usually keep me at the price I’m at or give me a discount,” Chitrathorn said. “The ones I have called have recently lowered my monthly pricing. This can add up to be a substantial amount of savings that can make a huge impact if you use those savings to save for the future.”
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