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<ul class="summary-list"><li><a href="https://www.crresearch.com/blog/subscription-service-statistics-and-costs">C+R Research</a> found that consumers consistently underestimate their monthly subscription bills.</li><li>A recent study found that shoppers were off by an average of $133 a month.</li></ul><p>Subscription services could be subtly eating away at your savings. At least that's what a new study from research firm <a href="https://www.crresearch.com/blog/subscription-service-statistics-and-costs">C+R Research</a> has found.</p><p>Currently, shoppers can set up <keyword id="12475706" type="UNKNOWN" weightage="60" keywordseo="subscriptions" source="Orion">subscriptions</keyword> to meet all sorts of needs, from watching original programming on Netflix, Apple TV+, Hulu, and Prime; to getting an influx of new styles with Birchbox or Rent the Runway, to listening to music on Spotify. But all of those options could be costing consumers more than they think.</p><p>The research firm surveyed 1,000 consumers from April 22 to May 2, 2022. Survey organizers gave participants 10 seconds to come up with a response to a question about how much money they spend every month on subscription services. They found that on average, "consumers underestimated their monthly spend on subscriptions by $133." Initial estimates averaged out to $86, while the participants' average "actual monthly spend" was more than 2.5 times higher, at $219.  Thirty percent of respondents were off by $100 to $199 on their estimates.</p><p>Mobile-phone subscriptions were the "most forgotten" type — with 31% struggling to remember this category — followed closely by internet subscriptions, television and movie streaming subscriptions, and Amazon Prime.</p><p>The study found that 74% of respondents "say it's easy to forget about recurring monthly subscription services charges," and that 72% of the survey participants have set all their monthly subscriptions to "auto-pay."</p><p>And all this confusion around subscriptions is taking a toll, according to C+R's findings; 22% of respondents told the research firm that they felt overwhelmed dealing with their multiple subscription services.</p><p>In April, streaming giant Netflix revealed that it <a href="https://www.businessinsider.com/netflix-loses-subscribers-first-time-decade-earnings-2022-4">lost</a> subscribers for the first time in more than a decade. Back in 2021, a <a href="https://www.businessinsider.com/streaming-services-most-at-risk-losing-subscribers-churn-report-2021-6">study</a> found that Showtime's subscription service was at risk for losing audience members. With so many options and subscription bills piling up, some of those woes could continue for subscription services as consumers reassess their options.</p>

Forgotten subscriptions cost consumers an average of $133 more than they realize a month, according to a new study

<p class="financial-disclaimer"><i>This article is brought to you by the <keyword id="9070397" type="UNKNOWN" weightage="60" keywordseo="personal-finance-insider">Personal Finance Insider</keyword> team. It has not been reviewed, approved, or otherwise endorsed by any of the issuers listed. Some of the offers you see on this page are from our partners, like Citi, but our coverage is always independent.</i></p><ul class="summary-list"><li>I recently received a letter from <keyword id="91294" type="CITY" weightage="60" keywordseo="American-Express">American Express</keyword> telling me that it reduced the <keyword id="189119" type="PERSON" weightage="60" keywordseo="Credit-limit">credit limit</keyword> on one of my cards because there hadn't been much activity on my account over the last year.</li><li>A lowered <keyword id="6354680" type="UNKNOWN" weightage="60" keywordseo="credit">credit</keyword> limit can have a negative impact on your <a href="https://www.businessinsider.com/personal-finance/which-factors-determine-your-fico-score-payment-history-is-key">credit utilization ratio</a>, which accounts for 30% of your credit score. </li><li>Credit card companies may lower credit limits if you haven't used your card for a while, or if your credit score suddenly drops. And in the face of COVID-19, some banks have  begun cutting credit limits to minimize their risk.</li><li>To avoid having any of your credit card limits lowered, make occasional purchases with all of your cards. Small purchases are fine; you just want to have some account activity. </li><li>Keeping your credit score in good shape and maintaining or growing your income can also help you avoid reduced credit limits.</li></ul><p>When I opened a letter from American Express dated February 15, 2020, I definitely didn't expect to see that the credit limit on my Amex EveryDay® Credit Card from American Express was cut, but that's exactly what happened.</p><p>I have an <a href="https://www.businessinsider.com/personal-finance/what-is-an-excellent-credit-score">excellent credit score</a> (836 according to TransUnion's model, and 818 according to Equifax), but I quickly realized why this happened: I hadn't used that card in quite a while.</p><h2>Why credit card companies lower credit limits</h2><p>When you <a href="https://www.businessinsider.com/personal-finance/easiest-credit-cards-to-get">apply for a credit card</a>, the credit card issuer looks at your credit and the ability to pay back any outstanding balance. Sometimes the decision is made by a computer in the blink of an eye. If you're approved, based on your income and credit history, the credit card company sets your credit limit.</p><p>I have four <keyword id="6387037" type="UNKNOWN" weightage="60" keywordseo="credit-cards">credit cards</keyword> from American Express but only use one of them regularly, my American Express® Gold Card, which has no preset spending limit. Using the "check your spending power" tool, I quickly found I can borrow at least $50,000 with that card.</p><p>My less-active <a href="https://www.businessinsider.com/personal-finance/best-american-express-cards">American Express cards</a> are older cards that I <a href="https://www.businessinsider.com/personal-finance/signs-you-should-downgrade-premium-credit-card">downgraded to in order to stop paying annual fees</a> for cards I no longer wanted. My Blue Sky card has an $8,100 credit limit and my old <a href="https://www.americanexpress.com/us/credit-cards/card/blue/">Blue® from American Express card</a>has a $8,300 limit. My Amex EveryDay® Credit Card from American Express, formerly an Amex EveryDay® Preferred Credit Card from American Express, had a high $20,500 limit at the start of the year.</p><p>After looking at my credit limits and activity, someone — or some algorithm at Amex — decided to cut my EveryDay card's limit by $10,000 to $10,500. The reason, according to the letter from American Express, was: "There has been minimal activity on your account in the last twelve months."</p><p>Inactivity is one of the most common reasons for credit card companies to lower credit limits. They may also cut limits to lower their risk with specific customers. Just because the credit card company sets a limit at a specific point in time doesn't mean your finances will always be the same. If your credit score suddenly drops, for example, the credit card company might decide to lower your credit limit.</p><p>Additionally, in the face of the coronavirus crisis, some credit card issuers have <a href="https://www.businessinsider.com/personal-finance/credit-card-issuers-lower-credit-limits-what-to-do-2020-4">begun reeling in credit limits</a> to minimize their risk during this uncertain time. </p><h2>How a lower credit limit can hurt your credit score</h2><p>Your cards' credit limits factor heavily into the <a href="https://www.businessinsider.com/personal-finance/which-factors-determine-your-fico-score-payment-history-is-key">formula that determines your credit score</a>. Your credit limits specifically factor into the second biggest factor of your credit score: your credit balances, or your credit utilization.</p><p>If you have high balances in relation to your total credit limit across all your card accounts, your credit score will suffer. A very low balance, on the other hand, will help your score. The credit score formula looks at the percentage of your available credit in use. Higher limits mean each purchase uses a smaller percentage of your credit limit.</p><p>When my credit limit was cut on my Amex card, my total available credit limits went down by $10,000. This wasn't a huge deal for my credit, as I have big limits across many cards, but for some people, it could be a bigger problem.</p><p>To better understand the impact, let's look at an example:</p><p>Assume you have a $5,000 balance split between three cards and a total available credit limit of $30,000. In this scenario, you are using 16.7% of your credit. That's well within the expert suggested limits of using no more than 20% to 30% of your available credit.</p><p>But if your credit limits are dropped to $20,000, all of a sudden you're using 25% of your available credit. That change is almost certain to negatively impact your credit score.</p><p>As a general rule, higher credit limits across your card accounts are better as long as you can manage them responsibly and don't spend more than you can afford to pay back in full every month.</p><h2>What you can do to avoid a lower credit card limit</h2><p>There are three strategies you can take to avoid the same fate as me:</p><h3>Maintain your credit score</h3><p>The first strategy to keep up your credit limits is to keep your credit score high. If you always pay on time and keep your balances low, your score should increase over time. Avoid late payments and high credit balances whenever possible. </p><h3>Maintain or grow your income</h3><p>Your debt-to-income ratio tells lenders how much of your income is needed to keep up with your credit-related bills. A growing income helps here, as does keeping your credit balances low. </p><h3>Keep your credit cards active</h3><p>For the specific reason my credit limit was cut, it's a good idea to keep cards active. Using a card at least once every few months for a small purchase should be enough to avoid having limits cut — or, even worse, cards closed — due to account inactivity. </p><h2>Use a system to keep your cards under control</h2><p>My wife and I have about 20 credit cards between the two of us. That's a lot of accounts to keep active. With so much to juggle, I'm not surprised my limit was cut by American Express.</p><p>To keep cards active, I use a combination of strategies. Some cards have a small recurring charge each month, like <a href="https://www.businessinsider.com/personal-finance/best-credit-cards-streaming-services">Netflix or Spotify</a>, that I pay with auto-pay. Other cards come out every three or six months and get used once or twice before going back in the drawer.</p><p>Whatever system works best for you to keep cards active, be sure to stay on it to maintain your credit card limits and credit score. In the long run, it is a great decision for your financial health.</p>Related Content Module: More Credit Card CoverageRead the original article on <a href="https://www.businessinsider.com/credit-card-limit-reduced-no-account-activity">Business Insider</a>

Why American Express lowered my card's limit even though I have a credit score of 836 — and what I could have done to avoid it

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Forgotten subscriptions cost consumers an average of $133 more than they realize a month, according to a new study

Áine Cain

Why American Express lowered my card's limit even though I have a credit score of 836 — and what I could have done to avoid it

Eric Rosenberg

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