Your credit card now has you covered if you forget to cancel a subscription service
2020 has been the year of streaming and subscriptions. For months, U.S. consumers were at home relying on subscription-based services as their main source of entertainment. With the travel outlook remaining depressed through the rest of the year, streaming and other at-home leisure activities will continue to remain higher than usual.
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There are hundreds of different subscription services, including streaming, that prospective customers can choose from. With many of those services offering free trials or limited-time promotions, it's easy to sign up -- and completely forget. However, you actually could be covered. It just depends on what credit card you're using.
Related reading: Amex provides limited-time streaming credits, other perks
An era of subscriptions -- and the ensuing fatigue
A recent study from Deloitte highlighted just how prevalent streaming and subscriptions have become -- and perhaps how it's reaching a saturation point for users. Prior to the pandemic, the average U.S. consumer had 12 paid entertainment subscriptions. However, even more telling is that Millennials -- who average 17 subscriptions -- were said to be “overwhelmed” by the number of subscription services they manage, with 43% intending to reduce them.
That's not a surprise, since nearly a quarter of subscribers said that "a free or discounted rate" was a significant factor in choosing a paid streaming video service. Subscribe, binge that one series and then cancel.
However, if you happen to forget that last step, the card that you used might have your back.
Related reading: Chase adds limited-time bonuses on streaming, other categories
The credit card policies
The major credit card networks -- Visa, Mastercard, and Amex -- have policies to protect consumers from unscrupulous subscription tactics. Each network's policy differs somewhat, but the general takeaway is that you need to be notified or give consent before being billed for recurring transactions. However, there is a huge caveat for Mastercard purchases.
Visa card policy
In April, Visa announced a new policy intended to help consumers better manage recurring payments for free trials. If you sign up for a free trial with a subscription service, the merchant must notify you with an email or text you of the following:
- Confirmation of the terms of the agreement
- Proactive announcement of future payments towards the end of the trial period
- Instructions on how to initiate a cancellation
Visa says that this policy benefits consumers since it "will help to ensure that [they] have greater transparency, choice and control over their subscription payments."
Related reading: Guide to the best Visa cards
Amex card policy
Amex has been known for siding with its cardholders when disputes with merchants arise. An Amex spokesperson also told TPG that the company has had "long-standing rules aimed at ensuring merchants provide proper notice to our card members of recurring charges on their cards."
The issuer asserts that merchants must obtain consent before submitting recurring billing and provide notification that cardholders can, in fact, cancel. Finally, Amex requires that merchant contact details are included and they act to cancel requests immediately. "We work to ensure that the cancellation process for recurring billing is simple and fast for our card members," the Amex spokesperson stated.
However, unlike Visa, it appears Amex doesn't require a merchant to remind consumers -- either through email or text -- about a trial period ending before billing begins.
Related reading: The best Amex cards of 2020
Mastercard policy
In 2019, Mastercard created a policy to protect consumers after free trials ended. The catch? It only applies to physical products, not digital services such as streaming.
"No one wants to be unsatisfied with a physical product after paying for it. For some consumers, a free trial is a great way to test out a new product and get comfortable with it before making a purchasing decision."
At a time when digital subscriptions are the norm rather than the exception, this policy seems a bit shortsighted. However, the good news is that for physical products, merchants have to notify you a free trial is ending before billing begins. Like Visa, this must be done over email or text and include merchant contact details.
Related reading: These are the best Mastercard credit cards
Bottom line
As consumers, we've likely all started free trials and wound up subscribing to something we didn't actually want. These policies help deter merchants from using those types of tactics.
With that said, none of the card networks will know at the time of charge whether the proper notification was made or not. Most likely, it would require a dispute. If there are enough complaints, that could be a violation of the merchant's contract -- and perhaps the card company could go to the extreme step of refusing to accept charges.
It's best to keep track of your trial subscriptions, but if you're like most Americans -- with a dozen or more services -- it's good to know that most cards will have your back in case you forget.
Top offers from our partners
How we chose these cards
TPG featured card
Rewards
5x | 5x on travel purchased through Chase Ultimate Rewards® |
3x | 3x on dining. |
2x | 2x on all other travel purchases, plus more. |
Intro offer
Annual Fee
Recommended Credit
Why We Chose It
We love the Chase Sapphire Preferred because it's a great introduction into the world of travel rewards. The card recently revamped its earning rates so cardholders can accrue rewards even faster. Point are worth 1.25 cents apiece when redeemed for travel through Chase, but can also be transferred to 11 airline and three hotel partners for even more choices, including those first-class flights and fancy suites you've been dreaming of.Pros
- Earn multiple points per dollar on things like travel and dining
- The current welcome bonus on this card is quite generous. TPG values it at $1,200.
- Premium travel protection benefits including trip cancellation insurance, primary car rental insurance and lost luggage insurance
Cons
- The card comes with a $95 annual fee
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Ultimate Rewards®.
- Enjoy benefits such as a $50 annual Ultimate Rewards Hotel Credit, 5x on travel purchased through Chase Ultimate Rewards®, 3x on dining and 2x on all other travel purchases, plus more.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Get complimentary access to DashPass which unlocks $0 delivery fees and lower service fees for a minimum of one year when you activate by December 31, 2024.
Rewards Rate
5x | 5x on travel purchased through Chase Ultimate Rewards® |
3x | 3x on dining. |
2x | 2x on all other travel purchases, plus more. |
Intro Offer
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Ultimate Rewards®.60,000 pointsAnnual Fee
$95Recommended Credit
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.670-850Excellent/Good
Why We Chose It
We love the Chase Sapphire Preferred because it's a great introduction into the world of travel rewards. The card recently revamped its earning rates so cardholders can accrue rewards even faster. Point are worth 1.25 cents apiece when redeemed for travel through Chase, but can also be transferred to 11 airline and three hotel partners for even more choices, including those first-class flights and fancy suites you've been dreaming of.Pros
- Earn multiple points per dollar on things like travel and dining
- The current welcome bonus on this card is quite generous. TPG values it at $1,200.
- Premium travel protection benefits including trip cancellation insurance, primary car rental insurance and lost luggage insurance
Cons
- The card comes with a $95 annual fee
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Ultimate Rewards®.
- Enjoy benefits such as a $50 annual Ultimate Rewards Hotel Credit, 5x on travel purchased through Chase Ultimate Rewards®, 3x on dining and 2x on all other travel purchases, plus more.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Get complimentary access to DashPass which unlocks $0 delivery fees and lower service fees for a minimum of one year when you activate by December 31, 2024.