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How Much Do You Really Save When You Cancel Subscription Services?

December 22, 2016

The past few years have seen massive growth in options for subscription-based services, whether it’s app-based, online video streaming or streaming music services or even traditional monthly fees like gym memberships. Now many consumers are beginning to wonder if it’s time to cancel subscription services as they look back on how the costs are adding up.  

Before You Cancel Subscription Services You Currently Have

Companies are making it easier than ever for people to sign up for monthly services, often at the tap of a button on your smartphone, to make their lives more convenient and colorful. However, one drawback of these subscription-based services is that the total costs can often be murky; before you realize it, you  might have signed up for 10 or more monthly subscriptions that are costing you significant money. Another challenge is when people fall into the autopilot mode of not checking their bank account often enough, only to discover that – without fully realizing it – they’re letting hundreds of dollars fly out of their bank account each year for services that they might not even use or want.

With that in mind, it’s important for people to stop and think about how much they’re spending on monthly subscription fees. $9.99 here and $12.99 there can really add up – and if you’re not getting enough value out of your monthly subscriptions, you’re often going to be better off putting that money into savings or using it for other financial goals.

How Much do Subscription Services Realistically Add Up to?

We talked with a financial expert who took a closer look at the true costs of monthly subscriptions, and tried to figure out how much money you can reasonably expect to save.

Cozette White is a financial coach and founder of My Financial Home Enterprises, a wealth management consultancy. She said after assessing whether or not to cancel subscription services and cutting back on other recurring fees, she’d been using, she saved approximately $1,425 per year.

“About 4 months ago I sat down and reviewed all my bills,” Cozette said. “I reduced my DirecTV subscription by about $15 per month or $180 per year, I cut back on my professional/team subscription, which cost $75 per month or $900 per year, and I no longer get my nails done every two weeks; instead I go every 3 weeks, saving approximately $345 per year.”

Cozette said that she has taken these monthly savings and redirected the money to retirement savings, a Rainy Day fund, and a Travel Savings account.

If you take a closer look at how much you’re spending on monthly subscriptions and other recurring fees, you might be surprised at how much you can save. Sometimes, you might discover that you’re paying money every month for services, features or app-based subscriptions that you don’t even want. According to Truebill’s own stats, featured in the International Business Times, the average person has 5 recurring bills and 10 elective subscriptions, and a study from the Media Insight Project found that young adults (age 18-34) are especially likely to have recurring bills, with 87 percent of these consumers having signed up for one or more subscription services.

But the same convenience and efficiency of signing up for subscriptions – such as by tapping a button on a smartphone app or signing up online or via email – can also create confusion. Sometimes people sign up for subscriptions that they forget about, or don’t realize that they signed up for in the first place. Approximately 25 percent of Truebill users realize that they have been paying for subscriptions that they didn’t want, and the average Truebill user saves $512 per year, according to figures quoted in the International Business Times.

TV: Streaming Subscriptions or Cable?

One helpful tool that you can use to figure out how much you can save by cutting the cord on your cable TV subscription is The Verge’s Internet TV Guide. This site shows you how much money you can save compared to cable by bundling together a few different online streaming services of your choice. For example, according to the site, Amazon, HBO Now, Netflix and Sling TV would cost a total of $52.23 per month, compared to the average basic digital cable package of approximately $66 in 2014. And with those services you would get a wide range of channels such as ESPN, HGTV, Food Network, plus all the on-demand shows and movies that are available on Netflix, HBO Now and Amazon Prime.

As discussed in this article on TechHive, cutting the cord can often save a significant amount of money in your monthly budget: “you don’t have to spend a lot on streaming subscriptions. Instead, you could limit yourself to a few services such as Hulu and Showtime ($17 when purchased together) plus Netflix. Round it out with free over-the-air antenna broadcasts, and you’re paying $27 per month, which is $68 per month less than a standard cable bundle. Cord cutting is as much of a bargain as you make it.”

And even if you don’t save a lot of money by cutting the cord, you’ll be getting a better value by being able to choose exactly which shows, movies and sporting events you get to see, on-demand, whenever is convenient for you – instead of paying for cable in a one-size-fits-all package that is full of channels you don’t watch. Even if cutting the cord doesn’t save much money, it still makes your TV-watching experience much better – and there is value in that. Instead of being trapped with all-or-nothing cable TV, you can create your own package of streaming services that work best for you. That ideal of personal customization is what on-demand apps and subscription services are supposed to be all about.

Time vs. Cost Benefit

Ideally, your monthly subscriptions should help make your life better and easier. There are many great subscription services out there to help bring efficiency, entertainment, joy and ease to your daily life. However, if you’re not careful, these subscriptions can pile up and start taking more money out of your bank account than they are worth. This is why it helps to pay close attention to your recurring monthly bills and fees as part of your overall personal financial plan, and make sure you’re really getting enough value out of all of those subscriptions and fees in your monthly budget.