Q&A: What Are Grey Charges on a Credit Card Statement?

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Question: What are grey charges on a credit card statement?

Answer: Grey charges are fees that kind of sneak up on you. These fees are usually the result of automatically renewing magazine subscriptions, online game subscriptions, or signing up for free introductory periods for a service or product that you forgot to cancel.

Remember being asked for your card information? After the free trial period ends, companies use your credit card information to start billing you. You might not even remember signing up for the service, product or paid newsletter. Or you might have even been the victim of a misleading sales pitch.

Grey charges can recur weekly, monthly, or annually. Since grey charges are usually small, they often go unnoticed. Sometimes, you'll think you canceled a grey charge but it still shows up. These charges are also called zombie charges because they won't seem to die!

How Common Are Grey Charges?

According to a 2013 study by the Aite Group, grey charges on credit cards and debit cards amounted to an unbelievable $14.3 billion in 2012. The average per cardholder was $215. So if you think about the annual cost, that's a good bit of cash. The most common grey charge is the free-to-paid business model. For instance, you give your credit card information to get a service for free for three months, and unless you cancel it, the monthly rate kicks in after the free trial period ends.

As encouragement to sign up for something, you'll often see this promise: "Cancel anytime!" So you think, "What do I have to lose?" and try out the service or product. This is often the case with credit monitoring or identity theft protection services.

After the free (or reduced rate) introductory period ends, the monthly rate starts being charged. This is fine if you decide you want the service. But in reality, we tend to forget we've signed up for things like this, especially if the amounts are relatively small.

How to Find Grey Charges

Don't wait until the end of the month to go on a hunt for grey charges. It's a good idea to check your credit card accounts frequently anyway to look for fraudulent purchases. So develop a habit of reviewing your online accounts (including accounts linked to your debit card) a few times weekly and look at every single transaction.

These charges are often under $20, so they are easy to miss. Sometimes, it will be an ongoing charge that you simply forgot to cancel, such as a monthly gym membership. When you find any grey charges, take steps to cancel it. Contact the vendor involved and let them know you're canceling the automatic payment. Be sure you check your statements to make sure you're no longer being charged the fee. It's also a good idea to get your notice of cancellation in writing.

Most grey fees are not considered fraudulent or even illegal. But if you feel you've been seriously misled by a vendor, you can decide to dispute the charges. This is just one reason why it's best to use a credit card online. If you want to dispute a charge, it's much easier to do if you've used a credit card instead of a debit card.

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