5 Ways Cable Companies Are Ripping You Off (And What You Can Do About It)Save on Bills
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Today I want to talk to you about your cable company. I know cable isn’t as popular as it was ten or fifteen years ago before streaming services like Netflix and Hulu, but something like two-thirds of the American population is still subscribed to cable.
Now that’s fine, I’m not here to tell you cable is bad or anything like that. But I know a lot of people who spend more than they need to on cable, so this piece is going to be all about cutting costs and saving money on your cable bill. And I’m going to focus on cable because that’s a really popular example, but at the same time I’ll cover some strategies that could also apply to other utilities and things like that, whether it’s your phone bill, your internet, your credit card fees, or anything else.
OK to start I want to mention the most obvious way your cable company could be ripping you off, and that’s simply charging too much for what you’re getting. Now you can only determine that on a case-by-case basis, it’s not like there’s an easy way to calculate the value of a cable subscription, but at the same time your cable company is always going to charge whatever they think they can get away with. And if you’re willing to push back a little then they might be forced to reconsider and offer you a better deal just to avoid losing a customer.
We’ve all heard about competition making businesses lower their prices to keep customers from moving to other companies, and that’s true. But ultimately it only matters if they actually think there’s a chance that you’re going to leave. So a lot of cable companies offer really good rates when you first sign up because they want to bring you in, and then after the first year or something like that they’ll bring you up to the usual rate.
Of course every brand is different, I don’t want to say you can always get a discount, but it’s usually really easy to get a better deal just by putting a little pressure on your cable company, especially as now they have to compete with streaming services like Netflix and Hulu.
Now you have a few different options if you think your cable company is charging more than it should. You can always call them on your own and try to negotiate with the customer service rep, and that will actually work more often than you might think. If you just tell them that you’re unhappy with your current rates and thinking about switching to another provider, there’s a good chance they’ll be willing to drop you to their introductory rates at least for six months or a year, however long they think it will take to get you off their back. And if that works then great, you can take the offer and either cancel when you lose the discount or try to get it back at that point.
On the other hand, things are obviously unpredictable when you’re trying to negotiate this on your own, it’s going to come down to whoever you’re on the phone with, or maybe the company has some kind of policy here. Plus you might be dealing with really long wait times, especially during the pandemic.
So if you’d rather avoid that option you can also use a service like Billshark, and basically what they do is contact your cable company and try to negotiate the bill down on your behalf. They essentially work on contingency, which means that they won’t charge you anything unless you save money.
If you use Billshark they’ll talk to your service providers, try to get your rate down, and then charge you 40 percent of the savings extrapolated to two years. So for example if they get your bill down from $50 to $40, that’s a difference of $10 per month. You’ll pay $4 per month for 24 months which works out to $96, and you’ll save an additional $144 on top of what you give to Billshark.
So yes you’ll lose some of the money you saved, but at the same time there’s a chance they’ll be more successful in negotiating. Billshark will also talk to other providers including your phone, internet, and satellite radio companies, so you could potentially save hundreds of dollars at once just by getting a discount on your monthly bills.
The second topic is definitely related to the first one, but it’s a little different. And what I want to talk about here is the common practice of bundling a wide range of channels or platforms into a single subscription.
Now this isn’t necessarily exclusive to cable, for example you might bundle home insurance with auto insurance or internet with your TV, but the difference with cable is that you could easily be paying for 100 or more channels that you never watch. And that’s really part of the cable business model, they know that most customers only want a small number of channels, but they make way more money by selling them all together than they would by offering each individual channel at a fraction of the price.
Now you probably already know if you have too much bundled into your cable subscription, but if you’re not sure you can always look through the listings and see what you have access to. And what you’ll probably notice is that there’s a long list of channels that you don’t even look at. So from there you can make a short list of the channels that you do want, and then you can start looking for a provider that offers those channels in a smaller bundle or at a lower price.
HBO is a great example of this. You can get HBO through a variety of cable subscriptions, but at the same time you can also pay HBO directly for access to their content, and that way you get around paying for whatever your cable company bundles in with your package. And in my view cable companies rely on people not double-checking this, not thinking too much about what they’re paying for, and certainly not making a list of what they actually want.
Taking inventory of what you need and how much extra money you’re spending is a really common piece of financial advice, and I think it’s especially relevant when you’re talking about cable since they rely on selling you more than you need.
I don’t have time to get into every possible alternative to cable right now, but I’m sure many of you are familiar with some of your options. Of course there are streaming services like Netflix, Hulu, and Disney Plus, and a lot of people have moved to those platforms rather than paying much higher rates for access to live TV.
But if you really want live TV for sports, news, things like that, there are still ways to get access to that content without paying for a conventional cable subscription. Even Hulu now has a plan that includes live TV, and there are some other big players like YouTube TV, Sling, and Philo that offer a decent selection of live content for much less than you might be paying for cable. So again I can’t tell you which provider offers the channels you’re looking for, but if you feel like you’re paying more than you should than I would recommend checking out some of those alternative options.
3. Early Termination Fees
If you’ve made it through the first two options and you’re not satisfied with your current cable situation, there’s a good chance you’re thinking about canceling. And obviously canceling cable entirely is the best way to save money if you don’t need it. A lot of times cable companies keep their customers hooked by offering small discounts, maybe you call and they give you $10 off for 6 months, but in the end it’s easy to forget about that after six months, which is why they do that.
So unless you just want to get a smaller package or something like that, you may be ready to cancel entirely. But unfortunately getting out of your cable contract isn’t always that easy, and some providers actually charge a fee just to cancel. Comcast, for example, typically charges $10 for every month you have remaining on your contract, which means that if you cancel today and you still have six months left then you’ll be on the hook for an additional $60.
OK maybe that’s only an extra month’s worth of fees, so it’s not necessarily terrible, but at the same time you’d much rather avoid that charge whenever possible. And in my view the best way to avoid paying that fee is simply to take a note of when your contract ends. So for example if you renew every year in March, set an annual reminder on your phone a few weeks earlier to give yourself a heads up in case you want to cancel or just try to get a better deal.
Now that may not be a realistic option right now if you’re looking for an immediate solution, and I want to stress that it’s never a good idea to keep your cable subscription just to avoid the cancellation penalty. Again that’s part of their goal in charging those kinds of fees, they want people to notice that it’s $10 a month and then think “OK I’ll just leave it until the contract runs out,” but with six months left you could still have hundreds of dollars in monthly fees over the rest of your contract, and more often than not the customer forgets about it by that point anyway. So if you’re not using cable and you’re ready to switch, I would say cancel immediately in order to save more money. Sure you might have to pay that fee this month, but at the same time you’ll get out from under it as soon as possible.
Now on the other hand there’s never a downside to negotiating these types of charges, so if you want to cancel early and you’re concerned about the fee I would recommend calling your provider directly in order to get it waived. Obviously I can’t guarantee this will work, and they don’t have much of an incentive to let you off the hook since you’re planning to cancel anyway, but ultimately the person on the other end of the line is human too, and you might be able to get a reduction or even a total waiver.
I also want to give you one last tip before moving on to the next point—if you want to cancel because you’re moving, you should ask the new tenant or owner if they want to take over your plan so that you don’t have to cancel and they don’t have to worry about setting up a new account.
4. Late Fees
Along with early termination fees, you might also be hit with a late fee if you don’t make your monthly payment by the due date. Now I could tell you to just not make late payments, but obviously it isn’t always that simple, and I know paying bills is complicated for a lot of people right now during the pandemic.
So again these companies are going to try to charge whatever fees they can, and late fees are particularly frustrating since you usually make late payments when you’re having trouble getting the money together, which means you’re basically being charged extra for not being able to pay. In that sense these fees are like overdraft fees you would be charged by a bank since you’re actually being penalized for not having enough money to cover your expenses.
If you notice that you’ve been charged a late fee, again I would say don’t underestimate the power of calling and asking for the fee to be waived. Of course I don’t want to overstate this strategy, but particularly under the circumstances you shouldn’t have any trouble getting out of a late fee, especially if you’ve generally been a good customer or you have a good reason for missing the payment. In fact early on in the pandemic Comcast announced that they would be waiving late fees for customers who are having trouble paying, but you would have to contact Comcast directly in order to ask for the waiver.
So this is another one of those situations where they’re probably going to charge the late fee to as many people as possible, and only a small percentage of their subscribers will be aware that they could have gotten out of the fee just by calling. I’m not sure how other cable providers are approaching fees during the pandemic, but in this situation I think there’s a good chance they’ll be willing to negotiate with you if you reach out about late fees or any other charges. The thing is that you have to be prepared to advocate for yourself, make some calls, talk to supervisors, things like that, especially with support times backed up at many of these companies.
5. Other Charges and Hidden Fees
Early termination fees and late fees are two of the most common extra charges I’ve seen cable companies try to get away with, but those are not at all the only ways you can get overcharged by your cable provider.
So the last topic I want to mention in this article is the vast array of hidden fees and unreasonable charges that cable companies rely on customers not fighting or not even being aware of. Again this is an issue that will vary depending on what provider you have, but in general it’s really critical to be vigilant about those extra charges when you’re trying to budget.
It’s been a few years since this came out, so I’m sure some things have changed since then, but there was a really prominent report in 2016 that was jointly released by Rob Portman, a Republican senator from Ohio, and Claire McCaskill, a Democratic senator from Missouri. And they basically found evidence of widespread overcharging on the part of cable providers, with a specific focus on Comcast, Charter, Time Warner, Dish, and DirecTV.
So for example Time Warner and Charter had merged into one company shortly before the investigation, and it turned out that the merged business was essentially making no effort to rectify their own overcharges. So if they charged you too much for equipment, even if you had actually sent that equipment in, well they were just going to turn a blind eye unless you made an effort to get that money back. And Time Warner in particular, before the merger they were overcharging by a total of around $2 million every year.
Now obviously this report was terrible publicity, all the companies involved tried to distance themselves from the findings and talk about changing their practices. I’m sure some of those issues really have changed, but at the same time it’s an open secret that cable companies aren’t exactly trying to help customers save money.
So one last time I want to emphasize the importance of advocating for yourself in these situations, especially when we’re talking about massive companies that will gladly let an extra fee get lost in the shuffle but will send you an immediate notice for any missed payments. I don’t want to generalize too much here, but in my experience a little pushback goes a long way when you’re stuck trying to get a refund or a waiver from a company that doesn’t give much out for free but still wants to do enough to keep your business.
All right that’s all I have for you in this piece, of course there’s almost no end to the ways cable companies will try to rip you off but I think I covered the most common methods and the easiest solutions.
Ultimately there’s no right or wrong way to approach cable, I don’t want to tell you how to spend your money, and if you’re fine with your current plan then that’s great. But what I’ve noticed in my own financial life is that it’s easy to lose track of how much you’re spending on different things unless you make a conscious effort to monitor your budget, and if you’ve had a cable subscription for a long time then you probably aren’t thinking about it that much. So I would highly recommend going through your statements, looking at your current cable plan, checking out some of the alternatives, and seeing if there’s a way to get what you want for a lower monthly fee.
And that really leads right back to budgeting in general, building the habit of staying on top of your bills, minimizing costs, and putting more of your income toward savings rather than spending it on things you don’t really use. I covered some of my favorite budgeting tips in a video on my channel, you can click here if you want to check that out. As always thanks so much for reading, I really appreciate it, so make sure to stay tuned and I’ll see you next time.
Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.