Forgotten direct debits can be a financial drain
BRITONS are being urged to watch out for “zombie bills” such as unwanted subscriptions and contracts or risk wasting hundreds of pounds a year.
Too many of us are throwing money away on forgotten direct debits, standing orders, subscriptions, donations and memberships by failing to pay attention to what is coming out of our account.
Financial experts are urging Britons to review their bank and credit card statements in the run-up to Christmas to root out unwanted payments lurking in their finances.
This follows a new campaign by Citizens Advice, which found that nine out of 10 people who tried to get out of an unwanted service were initially refused. REVIEW OUTGOINGS People fear they are throwing most money away on unused subscriptions for satellite TV, mobile phone contracts, Netflix, gym membership and Amazon Prime membership.
Despite the cost, almost half admit to not reviewing their direct debits and standing orders in the last 12 months, according to research from comparison site GoCompare.com.
It found that people are paying £28.30 a month on average for things they do not want or use, or almost £340 a year, with many paying between £480 and £600.
GoCompare head of consumer affairs Georgie Frost said automated payments can be a double-edged sword: “They can save you money and ensure you always pay on time, but you could end up with a load of zombie bills leeching your cash without realising it.”
If you see a payment on your statement you do not recognise, contact your bank or credit card provider immediately. She said: “They should be able to clarify who the payment is made to.”
Your bank is legally obliged to stop any direct debit or standing order immediately on request, but remember to keep checking future statements to ensure no further money is coming out of your account. You should also watch out for changes to terms and conditions, including new fees, errors and fraudulent payments, Frost added. PLAY IT COOL Many companies offer one-month free trials then automatically roll you onto a paid subscription, but Helen Dewdney, consumer rights blogger at The Complaining Cow, said check your cancellation rights before signing up. Then make a note to review your decision before the first payment comes out of your account. “You are also entitled to a 14-day cooling off period when you can cancel without penalty,” she said.
Dewdney added that the Consumer Rights Act 2015 gives you protection from unfair contracts: “For example, if a company says that you must give six months’ notice to cancel a subscription, that would be unfair. If you want to cancel, do so quickly and in writing, so that you have evidence.” TRAPS AND TRICKS The founder of online complaints service Resolver.co.uk James Walker said companies make huge profits from subscription traps: “They work on the basis that most of us are not very good at remembering when we have signed up to free deals and when they expire, so we continue to be charged for services we have forgotten about.”
The costliest traps include sample goods, often cosmetics or health supplements. He added: “You sign up for a free sample, but if you don’t cancel in time, other goods arrive, often with huge price tags.”
To compound the problem, many businesses are based abroad and dealing with them can be tricky. “If the business is not based in the UK, think twice. Your rights are not as strong in other places around the world.”
Always read the small print before signing up, he added: “We know it is a pain, but do you need 18 pages of text for a free trial? That is a warning in itself.”
Walker said you should also check the company’s contact details: “If a business makes it hard for you to speak to a person directly, be wary.”