Checking your credit card statements regularly can help you weed out recurring charges that are costing you money.
Recurring charges to your credit card can add up quickly, even if they're small amounts. These recurring credit charges, sometimes known as gray charges, show up on your statement monthly, biannually or annually, often as a result of automatic billing. Knowing how to spot these charges -- and eliminate them -- can help you sidestep an overinflated credit card bill.
What Are Recurring Credit Card Charges?
Normally when you use your credit card to make a purchase, it's a one-time deal. You swipe or dip your card at the checkout, or enter your details when shopping online, and that's it. A one-time charge shows up for the purchase on your next card statement. You choose to pay it in full or pay it off over time.
Recurring credit card charges, on the other hand, are charges that come back again and again. They can be larger charges, but most often, they're smaller costs that you don't necessarily notice unless you're carefully going over your statements each month.
Gray charges are a type of recurring charge that's associated with hidden fees, automatic renewals or increasing service fees for things you regularly pay for. The "gray" comes from the under-the-radar nature of these costs; they can sometimes be the result of sneaky or even fraudulent tactics used by the company that's charging you. In other words, it may be less apparent to you that you're paying for them.
How Do Recurring Charges End Up On Your Credit Card?
The kinds of things you could be paying for without even realizing it is lengthy, and many times these charges are the result of simple oversight on your part. For instance, you may end up with recurring charges on your card if you:
-- Fail to cancel a subscription service before a free trial period ends.
-- Forget to cancel subscriptions for streaming services you no longer use.
-- Forget about automatic renewals that charge your card biannually or annually.
-- Don't get confirmation that a subscription has in fact been canceled.
When you're not diligent about keeping up with recurring charges, it can be easy for something to slip through the cracks. But there are situations where recurring charges could be more than just a simple mistake.
For example, you might buy something with your card and the merchant doesn't tell you about hidden or ongoing fees associated with the purchase. Or a company blatantly uses false advertising to hide a monthly membership charge in what looks like a one-time service.
Another scenario involves a bait-and-switch tactic. You sign up for one level of services or membership, then you're automatically upgraded to a premium account that triggers a recurring credit card charge. You don't notice that your account has been changed until the new, higher fee hits your card statement.
Small Recurring Charges Can Add Up to Big Financial Headaches
Unless you're aware that you're paying for products or services you actually use, they're just a drain on your bottom line.
"You shouldn't be paying for something you don't want or know you're receiving," says Jared Weitz, CEO of online lender United Capital Source. "These gray credit card fees add up and can cost consumers hundreds of dollars per year; it's money you're throwing away that could be otherwise invested or saved."
Spending money on anything unnecessarily can throw a wrench into your budget or hinder your efforts to keep credit card debt to a minimum. Not to mention that if you carry a balance from month to month, you're not only paying for recurring charges, but you're also paying interest on them. If you have a card with a higher annual percentage rate, that can amplify what you're paying for recurring charges.
But there is a bright spot to gray charges on your credit card: better on your credit card than a debit card. On a debit card, an unexpected gray charge comes directly out of your checking account. With a credit card, you have a grace period to spot the charge and potentially get it removed before you have to pay for it.
[Read: Best Cash Back Credit Cards.]
How to Spot and Cancel Recurring Credit Card Charges
The easiest and best way to find recurring charges on your credit card is to laser focus on your credit card statements.
"Check your credit card statement every single month, but don't just look at the balance," says Erik Skjodt, co-founder and CEO of personal finance app Medean. "Make sure to skim through each transaction twice, as it should be pretty obvious to notice charges you don't want if you're proactive."
As you review your statements, you're looking for charges you don't remember agreeing to or charges that you thought had been canceled. But don't gloss over charges you recognize, assuming that they haven't changed, says Weitz. If you signed up for a $15 a month streaming service, for instance, make sure that you're still paying that same amount every month and that there hasn't been any fee creep.
If you spot a fee that you don't remember agreeing to, get in touch with the biller to cancel first. Explain that you weren't aware of any recurring charges and that you don't want to continue paying. If the biller objects to cancellation or refuses to refund anything it has charged to date, reach out to your credit card company to dispute those charges, Skjodt says. Your issuer may reverse the charge and credit the amount back to your account if you can prove that you didn't consent to the charges on a recurring basis.
How to Avoid Recurring Charges to Your Card Going Forward
Once you've cleaned up those gray charges, vigilance -- plus a few tools -- can help you dodge them in the future. Consider using these tips to eliminate the possibility of getting hit with recurring fees:
-- Use calendar reminders. If you sign up for a free trial period or a service that renews biannually or annually, set up a calendar alert a few weeks, then a few days before the renewal date so you have time to cancel if necessary.
-- Read the fine print before sharing credit card details. Before signing up for seemingly free services or products, check the terms and conditions carefully. If there are any recurring fees that you'll be charged, those should be clearly outlined.
-- Watch out for reactivation or penalty fees. You may be charged a penalty fee for canceling a service or membership early, such as a cellphone contract or gym membership. And you might be charged a reactivation fee if you cancel a subscription service, then decide to sign up again in the future.
-- Get confirmation when you cancel. If you cancel any type of recurring charge, ask for written confirmation that your account has been canceled and keep it for your records in case you're charged again.
-- Use apps to monitor for recurring charges. Apps can be a great way to get a handle on spending, manage your budget or save on purchases. There are some that are designed to help you spot recurring charges. Trim and Clarity Money, for example, scan the transaction history in your linked bank or credit card accounts to detect charges that occur repeatedly. Trim will even cancel subscriptions for you or negotiate a lower rate for certain services.
-- Set up transaction alerts for your credit cards. It's a good idea to check your card statements once a month, but you can also monitor for gray charges in real time using credit card alerts. You can set up an alert to notify you each time a new transaction posts to your account or each time a new transaction posts that's over a certain dollar amount. You can then log in to your account to see those transactions at a glance and confirm that they're charges you agreed to.
-- Take advantage of other credit card tools. Aside from alerts, your credit card may offer other tools or resources to help you fight recurring charges. Capital One, for instance, offers Eno, which is essentially a personal assistant for your credit card accounts. Eno monitors your purchases and confirms them with you to make sure you're not being charged for things you didn't authorize or incurring duplicate charges.
Bottom line? Recurring credit charges can be a pain, but you don't have to be stuck paying them.