Subscription creep leads to increasing budget strain for Americans

Subscription Creep Leads to Increasing Budget Strain for Americans

Consumers in the United States are experiencing significant financial strain due to escalating costs associated with subscription services, according to a recent survey. Conducted by CNET in conjunction with YouGov Plc, the study reveals that American adults spend an average of $91 monthly on various subscription services. This financial outlay has been exacerbated by a phenomenon experts refer to as “subscription creep,” where consumers are unintentionally paying for unwanted or unnoticed recurring services.

The survey was carried out between March 19 and 21, 2024, and captured responses from over 2,300 US adults, with 1,929 of them having recently engaged with subscription services. The analysis reveals various insights into spending behaviours and management strategies related to subscriptions, which are defined to include streaming services, e-commerce memberships like Amazon Prime, and music streaming subscriptions.

A notable finding from the data is that 48% of participants admitted to having signed up for trial subscriptions and forgetting to cancel them subsequently. This oversight appears more prevalent among Millennials and Gen Z adults, with 65% and 59% of these groups respectively admitting to such lapses.

In response to rising subscription costs, many consumers are adopting different strategies to manage these expenses. Approximately 31% look for deals or alternative, cheaper options, while 24% practise starting and stopping subscriptions as needed to cut costs. Bundling subscriptions also proved to be a popular approach, with 17% of respondents turning to this method.

However, the struggles associated with subscription services are compounded by frequent price increases. A significant 67% of survey respondents reported experiencing at least one subscription rate hike in the past year. Historically, services like Amazon Prime, which launched at an annual fee of $79 in 2005, have seen price rises above inflation rates, leading to a current cost of $139.

Consequently, one in four respondents indicated they had cancelled at least one subscription due to price hikes that exceeded their financial means. Additionally, 24% believed they were overpaying for existing subscriptions, while 12% found these costs outside their budget yet continued funding them.

Looking ahead, the Federal Trade Commission (FTC) is poised to introduce a “click to cancel” rule, anticipated to simplify the cancellation process for subscription services. This development is expected to alleviate pressure on consumers by providing a more straightforward means of disengaging from subscriptions, potentially yielding financial savings.

In the meantime, various technological aids are available to help consumers monitor their subscription costs. Among them, the Rocket Money app has emerged as a valuable tool. Notably recommended by CNET Money’s editors, it features bill increase tracking and negotiation options, although some features do require a separate subscription fee.

As the festive season approaches, it appears timely for consumers to reassess their subscription services. Many already employ a rotation method, canceling services they are not currently using and resuming them as needed, which aligns as the second most popular cost management strategy identified in the survey.

Ultimately, the proliferation of subscriptions poses a challenge for budget-conscious consumers. However, by employing proactive management strategies and leveraging forthcoming regulatory changes, they may navigate these complexities and better align their expenses with their financial capabilities.

Source: Noah Wire Services