Beware of 'gray charges' on your credit cards
One in three credit card holders is being charged for an unwanted product or service. Average cost of a 'gray charge' is $61.
Consumer credit cards are posed in North Andover, Mass. A recent report warns consumers about 'gray charges' on their credit card statements. These are fees that cardholders are paying for unwanted products or services.
Elise Amendola/AP/File
Look closely at your monthly credit card statement. There may be a few surprises – small, "gray charges" that can add up quickly.
These are fees that companies put on your credit card bill without clearly notifying you about what they are. These small charges are a hassle to deal with and easy to brush off, which is what the company wants you to do.
In 2012, there were an estimated 233 million gray charges, which cost consumers more than $14.3 billion, according to a recent study from BillGuard and the Aite Research Group. The average gray charge amounted to $61.
One in three cardholders is being charged for an unwanted service or product, according to the report.
Over 40 percent of the gray charges come from free-to-paid fees, where customers receive a product or service for a free trial and are then charged if they don't cancel the good or service within the specified time frame. These charges are legal, as long as they are mentioned in their contracts. The next most common gray charge is where consumers order a product online, but are also charged for a second item they did not purchase.
The report identified 11 types of gray charges that are not properly disclosed to consumers. These include unknown subscriptions, recurring memberships, and automatic renewals.
You may not be able to completely avoid gray charges, but be aware of them and analyze your monthly bill. If you see something you do not recognize, contact the company associated with the charge and ask what it is. You may be able to save a lot of money just by keeping a closer eye on your debit and credit card accounts.
Here are some tips for controlling gray charges:
1. Pay close attention to your monthly statement.
2. Use credit cards instead of debit cards. Disputes are handled faster and easier with credit cards.
3. Read the terms and conditions. Gray charges aren't advertised in the bold headlines, so read the fine print to know what you are signing up for.
4. Don't provide your contact and personal information for free promotions.
5. Set a reminder on your calendar to cancel the product or service before the trial is over.
6. If you have to remember to cancel it, you may not want to start it.
7. Know how to dispute a charge on your account.
– Bill Hardekopf is founder of Lowcards.com, an online credit-card information site.