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Beware of these consumer habits that eat up your budget

Being an informed consumer isn’t always easy in this day and age: new services, enhanced features, and the improved offers of FinTechs have changed the consumer experience more than ever before. But at what cost? Here are a few traps to look out for!

 

The multiplication of digital subscriptions

Several digital subscription service providers, such as streaming platforms (Netflix, Disney+, or TOU.TV, for example), music platforms (Spotify, Apple Music, YouTube Music), and meal-kit delivery services (Goodfood, for instance), work with opt-out agreements—once you’re subscribed, you stay subscribed until you cancel!

“Consumers enjoy a free trial period or discount, and then are automatically subscribed to the service at the regular price. To stop the service, they need to take the necessary measures to unsubscribe before the next renewal or delivery,” explains Sébastien Boulerice, lawyer and budget advisor for Option consommateurs. Otherwise . . . cha-ching!

Tips and tricks to counter digital oversubscriptions

App developers use the same tactic. Consumers try the app for free for a week or two, and then get charged the monthly or annual fee. Do we have a “digital oversubscription” phenomenon on our hands?

The Option consommateurs industry trust index seems to point in that direction. More than half of responders (51%) are subscribed to an opt-out agreement. Of this number, 66% claim to have subscribed with the intention of cancelling at the end of the trial period, but . . .

Doing so requires some planning! “These subscriptions add up, as do their costs, which sometimes goes unnoticed,” observes Boulerice. The expert recommends occasionally taking stock of your active subscriptions . . . and making choices.“Take note of each platform’s renewal date, and set a reminder a few days before said date. This will give you the time needed to finish watching the latest series you’ve been enjoying before cancelling your subscription, and maybe try another platform instead.” – Sébastien Boulericehttps://ocmagazine.org/wp-content/uploads/2022/05/photo-sebastien.png

Paying in instalments

Another popular trend mentioned in the Option consommateurs trust index: instalment payments. This solution allows consumers to pay a participating retailer in several instalments spread out over time—without interest and with no credit check—for something they want now. Payment providers such as Afterpay, Sezzle, and Paybright are the leaders of this solution in Canada.

Several consumers now choose to “buy now, pay later, and . . . consume more.” It could be tempting to increase the value of your shopping cart, knowing that the $100 expense could be divided into four $25 payments—the first payable immediately, and the others on a biweekly basis.

The survey also mentions that 68% and 44% of participants, respectively, buy clothes and shoes online. In the first case, 9% of buyers use this financing method, whereas 7% choose this option to pay for a new pair of boots or sneakers.

Users of such a service, who buy more as a result of the staggered payment option without carefully managing their budget, could quickly find themselves spiralling into debt. “It’s best to plan the expense beforehand, setting aside a given amount at regular intervals, and eventually making the desired purchase,” Boulerice recommends.

And as is the case in all buying processes, it’s recommended that you carefully read the contract’s conditions. “Consumers who miss a payment as stipulated in the payment agreement could be required to pay the amount in full, in one lump sum, losing the financing and facing additional financial pressure,” he warns

Extended warranties

The multiplication of digital subscriptions based on opt-out contracts and the use of instalment payment options are two consumer habits that are gaining traction. Slowly but surely, they eat up your savings, possibly without you even noticing . . .

There’s a third major issue that remains a concern of Option consommateurs year after year, and it is likely to increase your shopping bill even more: the extended warranty. Over the past two years, 17% of responders acquired one. For 71% of them, they did so for peace of mind, with the remaining 29% convinced to do so by the salesperson.

And yet, in Quebec, consumers already have access to a legal warranty. Note that the legal warranty typically covers more aspects, and for a longer period, than the extended warranty. So next time you’re offered an extended warranty, think twice. Because there’s no lack of expenses and increased costs in 2022!