Auto Renewals And Debt
On the face of it, automatically renewing memberships and subscriptions can seem like a great idea. As a society, Americans tend to like the “set it and forget it” convenience of automatic renewals for everything from newspapers and magazine subscriptions to health club memberships.
Auto renewal can help ensure subscriptions never expire; you never miss an issue of your favorite periodical, never lose access to your favorite online news sites, and never miss a payment or face late charges. The flip side of that coin, however, can be debt, especially if you forget to budget accordingly when subscriptions renew.
Most auto renewals are done through credit card payments. Ideally, you would pay off the credit card charge immediately, but you may overlook a renewal date, and the charge could stay on your credit card accruing interest. Too many forgotten renewals can increase your total debt and rack up high credit card bills.
Fortunately, you can enjoy the convenience of auto renewal and avoid increasing your debt with a few simple steps.
First, review everything you have on auto renewal – from the local newspaper to your fitness club membership, your son’s karate class tuition and your daughter’s cello lessons. Make a list of all auto renewals, the amount for each, the renewal date and which card you’ll use to make the payment. Knowing these items is important to your overall personal budgeting.
Next, create a spreadsheet that shows each auto renewal date and the amount that will come due. Or, you can incorporate this information into your existing budget tracking software/ program. Use the software to set reminders for yourself to pay off each charge within a week or two, to avoid paying credit card interest on the payment.
Another option may be to have auto renewals take directly from your bank account. Because you’re basically paying cash, you’ll never face interest expenses on subscriptions and memberships. You’ll still need to keep a close eye on your bank balance, statement and renewal dates, but this will help you better manage credit card debt.
Keeping on top of automatic renewals is one more important part of your overall financial management. Knowing when renewals occur and budgeting for them accordingly can help ensure you enjoy the convenience of auto renewal without increasing your debt.