The $5 Trap: How Subscriptions Quietly Steal Your Money

At first, it doesn’t seem like a big deal. You sign up for Spotify Premium because you’re tired of ads. Then you grab Netflix because your friend doesn’t want to share their password anymore. Later, you download a photo editing app that charges $4.99 a month. Individually, each one feels small as though it was only a few dollars here and there. Here are some of the most common:

Though each one seems tiny, every one of those small charges starts to become one big problem. This is called a subscription trap, and it’s one of the easiest ways to lose control of your money without even noticing. I didn’t realize I was falling into it until I checked my bank account one day and saw a bunch of small charges: $6.99, $3.99, $9.99. I had subscribed to stuff and totally forgot about it. It ended up being $325 a year. This was money I could’ve saved, invested, or used for something that really mattered.

Here’s why subscriptions are tricky:

• They’re automatic. Once you sign up, the app or service charges you every month without asking. If you forget about it, the money still comes out.

• They seem small. $5 doesn’t feel like much—until you have five different services charging you $5 each.

• Free trials fool you. You start a “7-day free trial” and forget to cancel before it ends. Suddenly, you're being charged every month.

  
  

So how do you avoid the subscription trap? Here are a few things that has personally helped me:

1. Track everything.

Make a list of all the things you pay for monthly: streaming, apps, cloud storage, anything. You can use your bank app or just write it down. Seeing it all in one place is a wake-up call.

2. Ask yourself what you really use.

Are you still watching that streaming service? Do you use that fitness app more than once a month? If not, cancel it. Most subscriptions can be restarted later if you really need them.

3. Set calendar reminders.

If you sign up for a free trial, put a reminder in your phone a few days before it ends. That gives you time to cancel it before you get charged.

4. Use gift cards instead.

If you only want Netflix for the summer, buy a $30 gift card and let it run out. That way, you’re not stuck paying every month afterward. This is my personal favorite.

5. Use subscription apps

My personal finance tracker is RocketMortgage. Recommend by my parents and grandparents, it allows me to ensure that all charges to my account are accounted for, legitimate and needed.

Subscriptions aren’t bad. Some are super useful. But if you don’t keep track, they can slowly drain your money, especially if you’re still in high school or college and don’t have a big income yet. Money disappears the fastest when you're not paying attention. Watching your subscriptions is one small habit that can make a big difference.