Do you ever get the feeling that there’s a black hole somewhere swallowing up your money at the end of the month? It’s not a substantial amount that seems to disappear, but enough to be bothersome. You may be one of the millions of consumers being hit with charges on your credit card referred to as ‘grey
charges’. When only ten percent of us take the time to review our credit statements each month, it’s no surprise that more than $14 billion in credit and debit charges go unnoticed annually, many initiated unknowingly by cardholders.
The Most Common Types of Grey Charges
While fraudulent and unauthorized transactions fall into the same category, most grey charges are legitimate, but less than transparent charges that the cardholder was not aware of initiating. Here are the most common grey charges and how you can prevent or stop them from being applied:
1) – Free Trials That Evolve Into Paid Services
These days many ‘free trials’ are actually agreements to signup for ongoing services or product deliveries – the details are in the fine print. For example, order a vitamin supplement trial and find out that you’ve been enrolled in an automatic refill program to receive the same product every 6-8 weeks. Marketed as a convenient way to prevent you from running out, problems arise when you either weren’t aware or forget about the automatic shipping policy and end up with more product than you wanted or needed and now need to get the order cancelled, which is a hassle all its own.
For services like identity theft protection, the payment may go unnoticed, adding up to hundreds of dollars in wasted money for a service that you may deem questionable at best. Magazine publishers use the same tactic when allowing you to preview their magazines for a few months. Before you know it, you’re charged for an annual subscription that you never intended to purchase.
THIS IS WHY IT’S SO IMPORTANT TO READ THE FINE PRINT. Don’t jump too quickly at free offers; there are generally strings attached. If you decide to sample a product or service, know when a charge will be imposed so you can cancel in time if it doesn’t meet your expectations. Keep in mind that it may take up to two months to stop payment after a renewal has been processed.
2) – Sneaky ‘Phantom’ or ‘Shadow’ Charges
These types of charges are less than transparent and are often found on the Internet. Authorization for services such as monthly horoscopes or ringtones is made when you fail to opt out during checkout by selecting a small check box. Another example is when you request a free copy of your credit report from a website other than the official free credit report site, Annual Credit Report.com, and you end up with a recurring charge for credit protection that you never intended to purchase. Phantom charges often come as a surprise when discovered, although in reality they were agreed upon.
To prevent phantom or shadow charges it’s wise to always pay with a credit card and not a debit card. You can dispute the charges and stop payment as soon as you discover a questionable charge. A debit card payment is the same as using cash and you’ll have a tougher time winning a dispute.
3) – Annual Fees & Fee Adjustments
Many services, including credit cards, have started imposing annual fees. While they’re clearly disclosed during the application process, they may come as a surprise when renewal time is up. An important question to ask yourself is whether or not the service is worth the additional fee.
Another example of an unexpected grey charge is a yearly fee that is automatically charged for a service that you already pay for monthly. This is a common tactic used with gym and health club memberships. A more stealthy way of taking your hard money is to apply small fee increases over time. A buck or two may not seem like much at first and it may go unnoticed, but when multiple services start upping your fees and doing so each year, the impact can be substantial.
What you can do about it…
The easiest way to prevent grey charges is to read the fine print and regularly monitor your credit card and bank accounts. Don’t be lured into a false sense that you’re getting something for nothing without carefully weighing the benefits against any hidden costs. Beware of any services or subscriptions that provide limited details, require a credit card number or sound too good to be true. If the terms are unclear, get answers to your questions before signing on. As you go through the checkout process online, be aware of any extra services or products that may be tacked onto your total.
Keep an eye on your accounts and if you find anything even remotely suspicious, contact the merchant and your bank. You have 60 days to cancel unauthorized or fraudulent charges with your credit card company. Cancel services in writing sent by certified mail and continue to check your statement to make sure the charges have been stopped or removed.