Locked in: Do your contracts suit your lifestyle?
The rise of contracts and subscriptions as a way of accessing content and services is a trend we’ve been witnessing for a while now.
Even from an early age, it’s been normal for us to be on some sort of plan or payment contract, whether this be for a phone, a gym membership or a subscription service. But do we really take the time to wonder whether these contracts are still fit for purpose? Do we always take the time to step back and measure these options against our lifestyle? Often, the answer is a resounding no.
The reality is, as society continues to normalise contracts and subscriptions, we as consumers need to be even more wary about what we are getting ourselves into, and using our purchasing power for what we want to see reflected in the market.
Along the way, we may notice that we’re able to avoid the restrictive and expensive confines of contracts, and live a little more simply or frugally.
The difference between contracts and subscriptions
In looking at this issue, it’s really important to note, that obviously there is a big difference between subscriptions and lock in contracts.
Subscriptions (like a streaming service for example) often have no minimum, making it easy to jump in and out when you need it. The important thing here is making sure that you aren’t just sitting idly by and paying for these while you don’t use the service, as many of us do. These can obviously be a big money waster and should be scrapped if you’re trying to tighten your budget and don’t prioritise the content your getting.
However, lock-in contracts on the other hand, are something we often need to be more vigilant about, as they may seem like a good idea in the first place, but can end up causing plenty of financial pain down the road if we aren’t careful about what we choose and what we’re agreeing to. So here are a few key points to help you stay on top of these complex issues.
What should I be looking out for in a contract?
In essence, when you’re going into a lock in contract, it’s worth considering the question: “What is this business getting out of me by locking me into a contract?”
While not all businesses are evil and looking to put you through financial turmoil, there are plenty of cases where certain businesses have been shown not to care about how contracts effect their customers, particularly after maybe a work situation changes or someone is up against financial difficulties.
So, make sure you’re very careful when you’re looking at signing a contract, and checking for a few things:
- Is there a minimum period? Basically are you going to be paying for this product or service for the timeframe you want to be, or is there an unreasonable time frame that doesn’t actually stack up to what you need the product for, if so, make sure to ask why this is the case, and is there a way to negotiate a lesser period for what you need. Speaking from personal experience this can be a really great thing, and in some situations can really save a lot of money and stress.
- Are there any kind of penalties, hidden costs, exit fees or scheduled fee rises? These can be the thing that turn a simple service into a nightmare that drains your bank account. Make sure that you know your fees and can comfortably afford them. Otherwise you may be in for a shock when rates go up or you go to cancel or finish your term.
Do I need this or can I find a simpler alternative?
Basically, is there a way that you can get the same service or product in a way where you aren’t going to be locked in?
If the answer is no, then make sure you know what you’re getting into above before signing.
If the answer is yes, then you may be able to find a cheaper or more flexible alternative. Maybe it means you may not get the brand new phone, but you keep your old one and pay a bill that is a quarter of the price, or maybe it means your weekly gym fees are just slightly higher, but you’re free to come and go as you please, not paying for times when you aren’t there or want to switch out. This seems simple, but really can have such a massive effect on your life. Because your services and products should work for you, not the other way around.
So, to all you Mob looking at signing a piece of paper, maybe take a moment to ask: “Does this really work for me?” If the answer is no, then you shouldn’t be signing anyway.
Like every article on this website, this is not personal financial advice. If you need help with debt, you can always call the National Debt Helpline: 1800 007 007.
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