Automatic renewals can be incredibly convenient. As they let you keep a service without having to worry about manually paying a bill or confirming you still want it. However, they can also be a budget buster. Especially if you lose track of the renewal period or fail to cancel in time. If you want to ensure auto-renew doesn’t give you trouble. Here’s what you need to know.

What Is an Automatic Renewal?

In the simplest terms, an automatic renewal is any contract that renews itself on a set schedule unless a contracted party intervenes. Technically, nearly all subscription services use automatic renewals. As you get billed on a schedule for the next period’s products or services unless you take steps to cancel.

Options like Netflix, Hulu, Disney Plus, Hello Fresh, Blue Apron, StitchFix, Amazon Prime, Amazon Subscribe and Save, and more can all fall in the subscription category. However, services like car insurance can also qualify, as you’ll get a new policy on schedule continuously unless you decide to cancel with that provider. Fitness centers and gyms also commonly use the model, though you can encounter it in other places, as well.

Are Automatic Renewals Legal?

Yes, automatic renewals are usually legal. As long as the conditions are clearly set forth in the contract (or terms and conditions, as may be the case for subscriptions) and the process aligns with local law, it is allowed.

Some states are stricter than others when it comes to auto-renew arrangements. For example, Vermont requires multiple client opt-ins, clear language, and bold-face text outlining the auto renewal in the contract. It also has requirements for sending customers notices before a renewal occurs.

If a free trial is one month or longer, Washington D.C. requires the company to get consent to start charging the customer automatically. The company also has to send a notice before the trial ends, disclose the details of the auto renewal, and outline cancellation processes.

The exact laws do vary from one state to the next. However, as long as a company follows them, they are legally in the clear.

How to Deal with Automatic Renewals

When it comes to automatic renewals, vigilance is key. You need to know which of your services have auto-renew clauses, the rules about stopping or pausing the service, as well as the steps you need to take to cancel.

Additionally, watch your bank account for signs of automatic renewal activity. That way, if you spot a charge that is associated with a service you forgot about, you can reach out and see what actions you may need to take to get a refund or, at least, cancel so that you don’t get hit during the next auto-renew period.

Do you have any tips for managing automatic renewals? Share your thoughts in the comments below.

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