5 Services the Middle Class May Be Overpaying For
Written by
Laura Beck
Edited by
Jenna Klaverweiden
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Are you getting nickeled-and-dimed on services you can’t avoid? From cellphone plans to cable TV, it’s easy for middle-class families to overpay for everyday essentials without realizing it. But identifying these budget leaks is the first step to plugging them.
GOBankingRates spoke to experts to break down some of the biggest services where you could be flushing money down the drain — and how to keep more cash in your pocket.
Cellphone Bills: The $144 Monthly Money Pit
The average U.S. cellphone bill now tops $144 per month, J.D. Power told CNBC. That’s a significant amount of money for something that was originally marketed as an affordable convenience.
The solution? Shop around and negotiate. Todd Stearn, founder and CEO of The Money Manual, said that if you hate switching carriers, find a better deal and then get your current provider to match it. Family and friend bundled plans can also trim costs significantly.
Cut the Cable Cord for Mega-Savings
U.S. News reported in 2022 that the typical American cable bill was $217 per month — more than some car payments. Stearn recommended ditching cable for streaming services like Philo (which costs $25 per month for 70-plus channels) or even cheaper options like Paramount+ and Peacock, which cost just $5.99 per month each.
He added that both offer free trials, so you can test them out commitment-free. À la carte streaming beats being nickeled-and-dimed by big cable any day.
Auto Insurance: Driving Costs Through the Roof
There’s no escaping auto insurance if you own a car. But there are ways you can take control of this notoriously expensive line item. “If you drive regularly, there is no way to cut this service out of your life, but [there are] a few things you can do to manage the expense,” said Thomas Brock, CFA, CPA, an expert contributor at Annuity.org.
“Consider increasing the physical damage deductible amounts on your auto policy. The more financial risk you are willing to assume, the lower the rate you can achieve,” Brock said. “Maintain legally required liability coverage limits on your auto policy, but consider reducing the physical damage coverage limits. This makes the most sense if you have an older and/or inexpensive vehicle you are willing to replace in the event of a serious collision.”
Most importantly, shop around and compare rates from multiple insurers each year. The auto insurance market is cutthroat, so providers will compete for your business.
Check Your Other Insurance Policies Too
Speaking of insurance, it’s wise to periodically review all your policies — home, life, health, rental and any others that have recurring bills. Adjusting coverages and shopping competitors can yield major savings over just renewing each year.
By looking into these yearly — or even biannually — middle-class families can save a pretty penny.
Expensive Gym Habit? Work Out at Home Instead
Many pay hefty monthly gym dues without getting their money’s worth. If you’re part of that crowd, ditch the membership and exercise at home to save money.
You can use free online videos and apps, or you can just hit the neighborhood streets.
Cut Costs by Hiring a Negotiator
Don’t have time to shop around and negotiate better rates yourself? Consider a bill negotiation service, like Rocket Money, that will do the legwork for you. Rocket Money charges a percentage of your first-year savings as a fee.
If it can’t negotiate any discounts, you won’t pay. So there’s no risk in letting Rocket Money or another bill negotiation service take a shot.
Review Bills Yearly To Avoid Overpaying
Doing a yearly financial audit by yourself or with a professional can keep you on top of overpayment. You can adjust your coverages and cancel services you no longer want.
Just putting in a little effort can help you save thousands of dollars a year. Hey, maybe you can even use that for a vacation.
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