Harris-Courage & Grady, PLLC
Subscriptions: A Hidden Financial Trap
Paul and Samantha’s finances were tight. Paul lost his job, and Samantha’s job wasn’t offering overtime as frequently as it used to. They looked at their budget and decided that, in addition to downsizing many other expenses, they needed to stop paying for cable. When they called the company and explained their situation, they got an unwelcome shock. Their cable contract stated that they would be charged $399 for cancelling their service early.
It’s important to be careful about entering into financial subscriptions or contracts. These can be a real problem if you have a change in your financial situation and can no longer afford the monthly payments. Cell phone, cable, and/or internet companies can charge large fees if you stop using their services before your contract expires. If you hit a financial bump, you want to be able to put your limited money where you need it, not towards getting out of a contract.
Don’t tie yourself into a contract that you may not be able to pay. We often see clients who are struggling with debts to these types of service providers when they come to us to file bankruptcy. Bankruptcy can provide relief from this and many other types of debt. However, it’s much better to avoid getting involved with these contracts in the first place.
When your cell phone, cable, or other subscription services are up for renewal, read the fine print to see if you are under obligation to pay a cancellation fee if you need to stop using the service. You may want to change to a provider that doesn’t have an early cancellation fee. Do some research and you’ll be able to find options that provide the services you want without charging these types of hidden fees.
An annual renewal is a great time to shop around for a less expensive plan. Does your plan have features you don’t need or rarely use? If you can reduce your monthly payments, you will free up your money for other areas, such as savings, investments, or getting out of debt. Be smart about the subscriptions you are using, and make sure that you aren’t paying more than you need to.