Subscription services play a prominent role in your day-to-day life. Subscribing to services through a credit card has its advantages and disadvantages. Understanding them makes your life smooth and straightforward. This guide explains the pros and cons of using credit cards for subscription services.
Pros of credit cards for subscription services
If appropriately used, subscribing through a credit card has multiple advantages.
- Simple and automatic payments
One of the major advantages of using credit cards to pay for subscription services is that automatic payments are easier to make. After you have stored your credit card details, payments are made automatically, and you continue to receive the service without interruption. This spares you the inconvenience of paying manually each month and interruptions due to missed payments.
- Rewards and benefits
Credit cards come with rewards programs, including cashback or points. If you use a credit card to pay for subscription services, you can earn rewards over time. These can be used to obtain gift cards, travel, or other rewards.
- Enhanced security
Credit cards offer extra protection when shopping online. The credit card CVV, a three-digit number on the back of the card, must be used during an online transaction. This prevents unauthorised transactions and enables you to contest charges in case a subscription service overcharges, or your card details are stolen.
- Making the most of credit cards
Credit cards offer extra benefits to subscription services, including extended free trial periods or special discounts. Certain premium cards offer free subscriptions to streaming services or waivers of subscription fees for certain services.
Cons of credit cards for subscription services
A credit card can become a financial burden if you do not use it sensibly.
- Unwanted subscriptions
Automatic payments can make you overlook unwanted subscriptions as you find yourself spending additional money. These little monthly fees can amount to large sums of money. You need to scrutinise your credit card statements and cancel unused subscriptions regularly.
- Payment failure due to expired cards
Suppose your credit card is cancelled or expires. In that case, automatic payments may not be successful, causing an interruption to your subscription services. To prevent this, update your payment details with subscription services immediately when you receive a new card.
- Risk of overspending
Credit cards are made to encourage users to subscribe to more services than they can afford. Without budgeting, this can result in too much debt. Hence, you must monitor spending and make sure subscription fees fit your budget.
- Security risk
Credit cards are secure, but fraud is always possible if your card information gets leaked. If your credit card gets stolen or lost, you could have charges for subscriptions you never ordered on your account. Monitor your credit card activity regularly and report any suspicious transactions immediately.
Conclusion
It is easy to use credit cards to pay for subscription services and earn rewards and security benefits, but risks are also involved. By knowing the pros and cons and using wise money practices, you can maximise the benefits and minimise the negatives.
Keep an eye on subscription usage and credit card charges to ensure your spending aligns with your financial goals. If used correctly, credit cards can improve your subscription experience and help you better manage your money.
