We all have indulgences and little treats to ourselves, but with the increase in monthly subscription services and product types, we might not be stopping to think that we are doubling up on their treats because the subscriptions get forgotten. Lost in our bank statements, many monthly subscription costs are digital, which means we might not be getting a physical reminder of their cost. This could be why Brits are spending five times as much as they think on their subscriptions on a yearly basis.
A study by Freeview, the free to use digital TV service in the UK, conducted a survey that highlighted Brits think they are spending £29 per month on their subscriptions, but they are actually forking over £149. Not only is the cost alarming but it indicates that many Brits could be racking up debts and accumulating bills without realising. Wizzcash are taking a look at what this could mean for your bank balance:
In the UK, we hit a milestone this year, with the population spending an incredible £100m on entertainment subscription services per week. This figure is purely focused on digital streaming services, including music streaming service, Spotify, as well as video streaming giants, Netflix and Amazon Prime. Digital video sales continue to grow, which suggests our continued use. Interestingly, the growth in this industry might not only suggest that more people are signing up, but also that more people are paying for more than one service.
Studies show that 13 million UK households now have at least one streaming subscription, supporting that we might be racking up monthly outgoings simply by doubling up on our entertainment packages without conscious thought. Users could expect to pay an average of $8.53 per month for each individual service. With an average of 3.4 streaming services per subscriber, that is a monthly bill of $29 (£22.58). This also doesn’t account for the purchased media (i.e. films and series that are not available as part of the package), which are not factored into this monthly price and thus, a budget. Furthermore, this could also be an additional cost to the more traditional TV services available in the UK, like Sky TV packages which are typically around £50 per month. Missing these payments could also negatively impact your credit score.
Deals and advertisements at the checkout of our online shopping basket promote premium delivery services on an annual basis. The most well known is Amazon Prime, with a Yodel survey highlighting that 78% of those with a mailing subscription opt to use Amazon, which averages out at about £7 per month. One of the benefits of Amazon is that it is a dual-service, wherein consumers get to use the digital streaming service as well as the premium delivery service, essentially a two-for-one deal.
Moreover, 27% of the people polled indicated that they have signed up for premium delivery for a grocery store, whilst 11% have committed to next day delivery subscriptions for a fashion brand, such as ASOS, New Look or Next. Marketing prompts us to believe that these are cost-effective services, for example, next day delivery is £5.95 on ASOS, but a subscription for premier delivery is only £9.95. However, the e-commerce clothing giant frequently runs free delivery promotions, such as spend £50, get free delivery, which could nullify the expenditure. Moreover, many of these subscription costs roll over without the consumer realising and will be subject to inflation and ‘price hike day’ at the start of the new financial year. As we have already learnt that so many Brits do not know how many subscriptions they have (and their subsequent costs), they could find themselves shorter on cash than anticipated, particularly as you can expect subscription costs to come out of a direct debit. This could lead to a financial emergency if a consumer turns to their bank account in an emergency or when they need money urgently, to find they have been hit by their subscription costs, and it may lead to them applying for temporary financial situations, such as short term loans.
Which? report that £37 million is wasted on unused gym memberships every year in the UK. From a personal perspective, this could be almost £500 per consumer! A gym membership is hard to cancel because doing so would signify not sticking to resolutions or health and fitness goals. It is important to prioritise your health and wellness as well as your financial stability and you may find it hard to establish a balance between the two. However, if you do find yourself growing tired of the gym or avoiding it, you might consider alternatives that could also be better for your bank balance:
- Pay as you go gym classes – if the reason you do not attend the gym is that you do not like an unstructured workout or simply find yourself too busy to go on a regular basis, you may find it cost-effective and beneficial to pick out fun classes instead. For many facilities, you can pay as you go (i.e. £5 per session), which might be a better solution rather than a direct debit every month. You will need to make sure this is still cost effective if you are attending multiple classes per week.
- At-home fitness – If you favour one workout machine, you might be able to find a second hand treadmill for a one-off cost and cancel your gym subscriptions. You would have to be careful to ensure this is cost-effective throughout the year, but running outdoors or taking advantage of free, online fitness classes like HIIT and yoga could make you feel more comfortable when exercising. Other low-cost fitness apparatus includes skipping ropes, yoga balls, hula hoops and benches.
- Make your gym package work for you – some gyms run different tiers of membership. If you have the top package, but only use the weight room, you might be able to reassess and simply cut down your membership.
As of 2018, an incredible 15% of online shoppers have signed up for at least one ‘monthly mailing boxes’. These subscriptions could be anything from meal kits to beauty boxes. As of 2018, the subscription box market had grown over 100% over 5 years in the USA.
Interestingly, 28% of people with these subscriptions (polled) say that a the personalised shopping experience is the reason they continue their payments. As consumers usually receive a physical package for this kind of subscription, it might be a payment that people remember. Moreover, this business model could appeal to a unique consumer that benefits from a good disposable income, but is limited on time, as they prefer the easy-access to renewable meal kits or similar. In turn, it is interesting to note that the companies with the longest subscription (in the US market) are brands such as Ipsy, JustFab fashion and Loot Crate, all of which are non-essential subscription boxes. Interestingly, these subscription boxes do experience a 40% cancellation rate, suggesting that something physical is easier to keep track of and eliminate when it is determined no longer useful or financially viable.
The Cost Of Losing Things In Your Bank Statements
There are other kinds of subscriptions that could be making a dent in your bank account, including app payments that automatically renew, online storage space payments, weight loss subscriptions and so much more! Which? report in an article about gym memberships that forgotten direct debts could total £303 per year, however, this is unclear as to which services this covers. Regardless, this is a substantial sum which could be used to start a financial cushion, a nest-egg or reallocated to make investment purchases that could save you money in the long run, as opposed to rolling payments that many consumers do not even notice the goods or services they get in return.
One thing to do to help stop unknown payments and costs coming out of your bank account is to print off your bank statement and go through it, making sure you account for every expenditure and deem every item necessary. For apps, it may be worth getting a break down of your phone bill, too, as this could be bolted onto the payment, protecting your financial security and ensuring you do not spend money unnecessarily.
If you’ve only realised how much your spending on your monthly subscriptions because you’ve got an unexpected bill you cannot pay, Wizzcash provide same day loans which could help you temporarily bridge the financial gap until your next payday or spread over a couple of months. You can apply for our loans online, but first it’s important to completely understand how it works.