'Gray Charges': Another Hidden Peril on Your Credit Card Bill

Americans Pay $14.3 Billion in Unwanted 'Gray' Charges
Americans Pay $14.3 Billion in Unwanted 'Gray' Charges

Everybody knows it's a good idea to monitor your credit card bill for unauthorized and fraudulent charges. But what about legitimate charges that you forgot you'd agreed to?

They're called 'gray charges,' and they tend to happen when you sign up for a free trial of a service and then forget that it's due to roll over into a paid subscription at the end of the month. They may also be a results of hidden or deceptive charges, or a subscription auto-renewals that you didn't know were coming.

And apparently, they can really add up. Billguard, which makes an app intended to help you spot and dispute these charges, says that they cost American cardholders $14.3 billion a year. The biggest category is "free-to-trial" charges, which can apply when you sign up for a free trial from services like Netflix, Amazon Prime or LinkedIn Premium.

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Using an app like Billguard doesn't necessarily eliminate these charges. It does empower you to spot them and then reach out to the companies charging you, but not every company will refund you the charge just because you forgot that a bill would come due at the end of the trial. (Though if you feel you were mislead or defrauded, then you do have the option of asking your credit card company to do a chargeback.)

That's why it's important to avoid a "set it and forget it" mentality when signing up for free trials. When you sign up for one, consider setting up a calendar reminder toward the end of the trial period so that you can cancel it if you decide you're not crazy about it. That's especially important when it's an annual subscription versus a monthly one. Accidentally letting your Aereo free trial become a paid subscription will cost you $8 if you don't cancel in time; letting your Amazon Prime membership roll over will cost you $79, as it's charged on an annual basis.

Sometimes, your biggest budget-busters can be the things you "purchase" automatically, so keep a close eye on your subscriptions and be sure to cancel the ones you don't want.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.