How to Avoid Convenience-Based Financial Traps

Subscription services offer everything from streaming to meal kits delivered to your door. The appeal is obvious: for a monthly fee, you get access to a product or service without the hassle of individual transactions.

But the average person spends $77 a month on subscription services, which is a fair chunk of change.¹ And a large amount of that spending goes unnoticed, with many people forgetting about subscriptions for months or years.

This isn’t entirely surprising, as the convenience of subscription services hides their financial impact. Signing up for a free trial is effortless, but it’s easy to lose track of the renewal date.

Services might deliberately make the cancellation process complicated or easy to overlook. Many people find themselves paying for multiple services that provide similar benefits, like different streaming platforms, which can eat away at their disposable income.

How to avoid the trap

• Set a reminder every three months to review all recurring charges on your bank statement, a sort of “subscription audit”.
• Cancel services that you no longer use or that overlap in functionality.
• Consider using a subscription management app to help track and negotiate lower rates on your subscriptions.
• Always set a calendar reminder before the end of any free trial period so you can cancel it before you get billed.

People pay around 40% – 100% more for meals ordered through delivery apps compared to dining in or picking up directly from the restaurant.³ The inflated price includes delivery fees, service fees, and sometimes even higher menu prices specifically for app users.

Plus, the frequent use of these apps can turn into a costly habit. It’s easy to overlook the built-up cost of ordering out multiple times a week, especially when each transaction is small. But these small charges add up quickly, significantly inflating your monthly food budget.

How to avoid the trap

• Try to only use food delivery apps for special occasions or emergencies.
• When you can, plan your meals ahead and take advantage of grocery delivery services. These services often have lower fees and allow you to better control your spending.
• When you must use a delivery app, look for discount codes or opt for pick-up options to avoid delivery fees.
• Explore restaurant loyalty programs, which often offer discounts or perks not available through third-party apps.

Buy-now-pay-later (BNPL) services like Afterpay allow you to split purchases into smaller, interest-free payments over time, making it easier to afford big-ticket items. While BNPL can seem like a savvy financial tool, it can lead to overspending. 34% of BNPL users say they’ve paid late at least once over the past year, which can lead to late fees and potential damage to their credit score.⁴

When you aren’t required to pay the full price upfront, the cost of an item feels less significant, which can encourage impulse purchases. This can quickly spiral into debt if you’re juggling multiple BNPL plans at the same time. Plus, missing a payment can lead to hefty fees and interest charges, wiping out any of your initial savings.

How to avoid the trap

• Before using a BNPL service, ask yourself if you need the item and whether you can afford to pay for it in full.
• If you do use a BNPL service, set up automatic payments to avoid late fees and track all your BNPL commitments diligently.
• Limit yourself to one active BNPL plan at a time, and prioritize paying it off before considering another purchase.

Mobile games and apps often lure users with the promise of free downloads, only to entice them with in-app purchases once they’re hooked. These “microtransactions” — often for extra lives, faster progress, or exclusive content — might seem insignificant, but they can add up to a large amount over time. Mobile gamers spend a staggering $80 billion a year on in-app purchases.⁵

The convenience of instant gratification makes it easy to lose track of spending. With payment information saved in your app store account, each purchase requires just a quick tap, creating a spending habit that is hard to kick. This trap can be even more costly for parents, since children may inadvertently make purchases while playing games, leading to an unexpectedly high bill.

How to avoid the trap

• Disable one-click purchasing on your devices and require a password for every transaction.
• Set a monthly limit on app-related spending, and then stick to it.
• If you find yourself spending too much on a particular game or app, delete the app altogether.
• For parents, activate parental controls on devices used by children to prevent accidental or unauthorized purchases.

Auto-renewal settings on services like cloud storage, software subscriptions, and even gym memberships can become yet another financial trap if they aren’t monitored closely. Around 51% of Americans have been hit with unexpected charges due to forgotten auto-renewals.⁶ This is particularly an issue with services that increase in price after the initial promotional period, catching users off guard with higher bills.

How to avoid the trap

• Keep a list of all the services you use with auto-renewal settings, along with their renewal dates.
• Set calendar reminders well before each renewal date, giving yourself time to cancel if you no longer need the service.
• Be vigilant with subscriptions that offer a low introductory rate, as these could increase significantly after the initial period.
• Review your bank statements monthly to catch any unexpected renewals and take care of them right away.

While modern conveniences can enhance our lives, they also come with hidden costs that can quickly add up. By being aware of the financial traps associated with subscription services, delivery apps, BNPL schemes, in-app purchases, and auto-renewals, you can confidently manage your spending without sacrificing convenience.

To save even more money each month, check out our top money saving hacks.