Hidden Charges Can Create Credit Card Debt for Many Consumers ...

By John Clark

Each year, millions of American consumers are buried under the weight of credit card debt. And for the folks who don?t discharge their debts through Chapter 7 bankruptcy, this financial weight can be crippling.

Much of this debt, however, might be bogus, especially for consumers who fail to pay attention to so-called ?gray charges? on their credit card statements.

Savvy consumers should watch out for avoidable charges that account for billions of dollars in revenue for credit card companies each year, according to a report from NBC News.

Zombie Subscriptions, Automatic Renewals, and Cost Creep

According to BillGuard, a consumer protection company, one in four credit card users is hit with gray charges each year, and the average annual cost of these hidden fees is a staggering $358.

Three of the most pernicious gray charges include ?zombie? subscriptions, automatic renewals, and cost creep, according to sources.

First, ?zombie? subscriptions occur when consumers cancel a particular service, but that service comes back to life without their permission. When this happens, the canceled service may resume appearing on their cards, without the consumer even recognizing the gray charge.

In addition, credit card users often sign up for particular items and forget to cancel their automatic payments before the deadline for their automatic renewal.

To make matters worse, many merchants will refuse to cancel the charge after it appears on a credit card, so shoppers should be very careful about signing up for automated renewal services.

Finally, cost creep has become a major issue for credit card users. This occurs when a purchase that takes place monthly or quarterly, say, for a magazine subscription, rises by a minor amount each payment period.

Consumers who do not check their statements on a regular basis could lose a significant amount of money to cost creep.

Questionable Credit Card Charges are Widespread

While some consumers may think these unsavory tactics are limited to just a few credit card providers, sources say the problem is widespread.

According to Yaron Samid, the chief executive officer of BillGuard, gray charges create ?billions of dollars for these companies? and he is ?surprised by the amount of legitimate companies? that have ?repeatedly confused and deceived customers into paying.?

For example, AOL offers dial-up subscriptions for online access with automatic monthly billing. A recent survey shows that three million consumers still used this outdated service, but sources speculate that only a fraction of these people still use the dial-up service.

Source: http://www.clearbankruptcy.com/blog/hidden-charges-can-create-credit-card-debt-for-many-consumers/

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