Why Letting Subscriptions Auto-Renew Can Quietly Cost You $1,200 Over 12 Months

According to Andrew Lokenauth, founder of Fluent in Finance, the average American quietly pays somewhere around $900 to $1,200-plus per year on subscriptions they forgot they signed up for, and the companies behind these products know exactly what they're doing.

"Auto-renewal is a psychological trap," he said. "It exploits something called 'status quo bias,' our brain's tendency to let things stay the same rather than take action to change them."

Read Next: Frugal Living Pros -- Cut 4 Everyday Services That Drain Your Budget

Learn More: 5 Signs You’re Losing Money Every Month — and How To Find the Leaks

Here's how letting subscriptions auto-renew can quietly cost you $1,200 or more a year.

Easy To Forget

"You might use the subscription for a while, but then forget about it and never use it again," said Melanie Musson, a finance expert with Quote.com. "But you still renew it when you're on auto-renew."

Musson added that if you have five subscriptions you're paying for but not using, you could be wasting $500 to $1,000 a year.

Simple To Fix

Per Lokenauth, the fix is simple but most people skip it.

"Once a month, pull up your bank or credit card statement and filter for recurring charges," he said. "Cancel anything you haven't used in the past 30 days. No exceptions."

To protect your budget, it's important to be vigilant about upcoming charges and take action.

"You almost certainly get an email when your renewal is approaching," Musson said. "Instead of skipping over it, open it up and go through the email to cancel."

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.

More From MoneyLion:

• Discover a Smarter Way to Keep Unexpected Expenses From Derailing Your Budget

• Got $20 To Spend at Dollar Tree? Consider These Fine Spring Items

• Be Honest — Do You Have Enough Cash at Home in Case of a National Emergency?

• This Tool Lets You Audit Your Spending Habits in Seconds