Americans are increasingly falling victim to so-called "ghost charges": small, frictionless payment purchases at Starbucks or McDonald's, or digital subscription deductions from your bank account you forgot about. The costs may only be $5 or $10 a pop, but they add up, and before you know it, $200 has disappeared from your savings every month.
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A recent study from Cashews, a digital bank tracking platform for serial small recurring charges, shows that 61% of people have more than $50 a month in these small charges; 38.7% have more than $100 a month; and 14.5% have more than $200 a month in charges where no single charge is over $100. Additionally, three of the median person's four small recurring monthly charges go to merchants they never otherwise interact with.
"One in seven people is spending over $2,400 a year in increments too small to trigger a second look," the Cashews report stated. "Nobody notices a $16 charge. That is the point."
Retailers and businesses are counting on you to pay too quickly
Financial payment technologies are making it easier than ever to pay via one-click, tap payments and digitally stored autofill payment data. Combined, those technologies enable consumers to buy that $4.99 magazine subscription or $18 DoorDash order without thinking too hard about it.
"What gets me about tap to pay and saved debit cards is that they remove the one moment that used to make you think twice," Taylor Kovar, a certified financial planner and founder of Klear, a household budgeting app platform, told Moneywise.
Kovar said there used to be a tiny pause before money left your account, even if it was just typing in sixteen digits. "That pause is basically gone now, so spending starts to feel automatic instead of like a choice you're making," he said. "I hear this a lot from people who aren't shocked that they spent money; they're shocked that they can't remember any of it happening."
Other consumer financial experts say removing the 'friction' from paying for goods and services basically removes a consumer's memory.
"When paying takes a tap instead of a deliberate act, the brain doesn't encode the purchase as strongly, so people genuinely recall less of what they spent," Robert Williams, founder of Credit Card Wind and a former credit risk analyst at Synovus Bank, told Moneywise. "Stored cards and one-click checkout are built to minimize the pause where reconsideration happens, and that pause is exactly what used to stop ghost spending."
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