There is an old wisdom:

This wisdom is not lost on some businesses as they know it’s easier to sell you a service once and then bill you for it automatically over a long period of time versus reselling the service to you each year. This form of billing, called annuity billing, is now common practice for most businesses. So who are the biggest users of this strategy?

• Cell phone companies*
• Cable and satellite television companies*
• Garbage haulers
• Banks*
• Credit monitoring services
• Cloud computing services (storage and file sharing)
• Any “of the month” clubs (books, music, fruit, meats, etc.)
• Maintenance contracts from service providers (heating, air conditioning, landscaping, etc.)
• Subscriptions (newspapers and magazines)
• Other online services (finding/rating local supplier services, online TV viewing, sports viewing packages)

* often contain multiple annuities within a bill

Action to Take Now

Create a list of your annuities. Check your bank account and credit card bills for similar monthly charges. Identify each vendor related to the bill and note what the service is that they provide. Then calculate an annual column for each bill (monthly times 12). Next, add all the costs up to find a monthly and annual total.

Note long-term contracts. Check the annuities for any exit penalties and auto renewal clauses. Write the auto renewal companies immediately to formally move to month-to-month after the initial contract expires.

Review the usefulness of each monthly bill. Now rate each bill on a scale from one to five against how important each one is. Start closing down those that are less valuable to you.

Move to annual billing where possible. While it creates a larger bill upfront, it requires the product to be resold to you each year. If you still love the service, try to negotiate a lower rate. This tends to work well with suppliers like online digital radio services.

Look for alternatives. Perhaps it is more cost effective to drop a group of premium channels in your online viewing lineup or replace cable with an online streaming service.

Eliminate overlap. Many consumers now have multiple streaming services. Rationalize them and consider whether any could be eliminated. The same is true for gaming and music services.

Conduct an annual bill review. A number of providers have multiple annuities within each bill! This technique is common with cell phone providers. So conduct an annual review of your bill with a service representative and look for a better deal.

Eliminate autopay. This out-of-site, out-of-mind technique is wonderful for the annuity billers. Paying for a service each month is a simple reminder of the cost of the service and a subtle hint to assess the value of the service to you. So each year, turn off your autopay. Leave it off until you have conducted your annual review. If the service is still of value, then and only then, turn it back on again.

The problem with annuities is they slowly carve out portions of your income for many years. Perhaps it is time to jump out of an annuity or two and save some money.