Using Credit Cards to Manage Subscription Services in Canada

In today’s world, you can subscribe to just about anything. From gym memberships to streaming services to music apps and food delivery platforms, all you need is a credit card and you’re locked into wellness, entertainment, and culinary convenience. 

That said, it can be tough to keep up with all of these recurring payments, which is why we put together this piece on effectively using credit cards to manage subscription services in Canada.

To discover how to make subscription payments seamless, rewarding, and beneficial to your credit health, keep reading.

Managing Recurring Payments Using a Credit Card

To manage your recurring payments using your credit card, simply:

Select a Complementary Card

First thing’s first, you’ll want a credit card that complements your spending habits and your recurring payments.

To make the selection process a bit easier for you, FinlyWealth has developed an insightful credit card finder tool that ranks, compares, and breaks down the top credit cards in Canada.

Use the Same Card for all of your Subscriptions

To keep your subscription costs in one place, consider charging all of them to one credit card. This makes both monitoring and budgeting your spending much easier.

Calculate Subscription Costs and Create a Budget

Once your credit card account is all set up, you’ll want to start managing your spending.

After carefully deciphering which subscription services you’d like to subscribe to (and by carefully, we mean actually taking the time to read each service’s terms and conditions!), calculate how much you’ll be spending in total on these recurring payments. 

To prevent overspending, ensure you can responsibly cover all these costs on a monthly/yearly basis.

While many subscription costs are quite small on their own, they can add up quickly!

Opt Into Automatic Payments

When it’s time to start spending, set up automatic payments with your card. When your payments are automated, you’re less likely to miss them. Missing payments can result in late fees and debt accumulation – two problems you definitely want to avoid!

You can typically set up pre-authorized or automatic payments by saving your credit card information directly with the subscription service, either through their website or app.

Set Up Alerts

Credit card transaction alerts keep you in the loop in terms of where your money is going, when it’s being charged, and how much is being billed. These alerts can help you spot duplicate charges or unexpected increases in your subscription costs. Generally, the subscription service itself will alert you to any price changes.

Transaction alerts are typically relayed via email or text and can be enabled through your card issuer’s online or mobile banking platform. 

Check in Frequently

Even if you have payment automation and alerts, you’ll still want to review your credit card statement regularly to ensure you're following your budget – or to check for any fraudulent or unexpected charges. 

The Pros of Using a Credit Card for Subscription Payments

Based on the above tips, it’s unsurprising that there are many perks to using your credit card to manage your subscription services.

More benefits of using a credit card for subscription payments include:

Rewards

While we mentioned this briefly before, it's worth highlighting once more that there are plenty of credit cards that optimize recurring payments (like subscription services) through point or cashback rewards systems.

For example, if you’re looking for a cashback card that boosts your subscription services, check out the Scotia Momentum Visa Infinite Card. Alternatively, if you’d rather rack up points for your memberships, consider the MBNA Rewards World Elite Mastercard.

Read More: Best Cards for recurring bill payments

Security

When you cover expenses using a credit card, many purchases are protected by fraud security like zero-liability policies that ensure you’re not held responsible for fraudulent charges to your card.

Therefore, if an unauthorized recurring payment is charged to your credit card account, you can likely dispute it with your issuer.

Credit Health Support

Paying off all of your recurring payments on time is a great way to build positive credit. 

Setting up automated payments also helps you stay on top of recurring charges to advance your financial health.

The Cons of Using a Credit Card for Subscription Payments

The biggest con of using a credit card for subscription payments are the potential hidden costs. That said, these downsides are just that, potential. By identifying these sneaky fees or temptations now, you can be strategic about avoiding them later.

Annual Fees

When opting for a credit card with a rewards program that optimizes recurring payments, you may find that more impressive earn rates come with annual fees.

In all honesty though, if you intend on using a credit card to its full potential, meaning you’ll make use of all of its benefits and will collect as many rewards as possible, you can offset the yearly cost.

Debt Susceptibility

In general, credit cards make it easier for some people to overspend, and overspending leads to credit card debt. Adding a $10 monthly subscription to your card may seem harmless, and on its own, it probably is. The real issue arises when you use that same mentality with multiple $10 subscription charges, turning $10 a month into $50 or $80 a month. In addition to essential monthly payments like rent and utilities, these added costs might dip into dangerous territory – the kind that results in carrying a balance.

Interest Rates

Building off of that last point, when you carry a balance on your credit card, you become subject to interest rates. Regular reward credit cards tend to have higher interest rates, which will cancel out the value of any cashback or points you’ve collected.

The best way to avoid debt and interest charges is to stick to your budget and consistently keep track of your spending.

Unnecessary or Underused Memberships

Another reason why it’s so important to keep track of your spending is because it helps you put things into perspective. For instance, if you’re starting to realize you're paying a hefty monthly fee for an app or service you barely use, it’s probably time to cancel that subscription.

Let’s face it, oftentimes, we also subscribe to services because of their free trials. In fact, a recent survey conducted by Hardbacon, a Canadian financial technology company, found that 73% of polled Canadians subscribed to a service for the free trial alone. 66% of these respondents were ultimately billed as a result of forgetting to cancel the service afterwards. 

Bottom line: Avoid falling into the same trap as your fellow Canadians – cancel subscriptions you no longer need and those you can no longer finance.

You can typically cancel subscriptions through your online account affiliated with the service (either via settings or by contacting customer service). If you’re having trouble canceling with the merchant directly, you can always consult your credit card issuer to see if you can have them cancel future payments.

Conclusion

Subscription services are taking over, concealing content and perks until you go premium, and upping prices after you’ve already been hooked for months. 

Don’t get us wrong – these memberships offer tons of convenience, but using them responsibly means handling them properly.

Using credit cards to manage subscription services is a strategic way to track, automate, protect, and optimize these recurring payments.

Set your budget, stick to it, and monitor it frequently to avoid surcharges, debt, and a bruised credit score. 

Frequently Asked Questions

Is it smart to put all my subscriptions onto one credit card?

As long as you’re managing your spending carefully, using one credit card for all of your subscriptions is extremely beneficial. By consolidating all of your recurring payments onto one card, you can stay organized, track your transactions, and spot any duplicate or unauthorized payments easily. 

Will using a credit card for subscriptions help improve my credit score? 

If you pay all of your credit card balances (including your subscription payments) on time and in full each billing cycle, you can boost your credit score. To make timely payments simpler, consider setting up pre-authorized or automatic payments using your credit card.

Are there any risks associated with using a credit card for subscription services?

The main risks associated with using a credit card for subscriptions are overspending and carrying a balance. It’s easy for small subscription fees to add up, especially if you forget about expired free trials and unused services. If you cannot pay your balance in full each billing cycle, you’ll likely collect interest charges and fall into credit card debt. 

What kind of credit card should I use for subscriptions?

Credit cards that offer rewards on recurring payments or membership expenses are great contenders for covering subscription costs. Consider the Scotia Momentum Visa Infinite Card for points or the MBNA Rewards World Elite Mastercard for cashback.

When applying for a rewards card with an annual fee, always be sure that the card’s benefits and annual value outweigh the annual fee – especially if you intend on primarily using the card for subscriptions.