DEFINITION of 'Gray Charges'

Fees consumers pay via credit card or debit card for unwanted subscription services that are automatically renewed or that are automatically converted from a free trial to a paid subscription. Gray charges also include hidden fees and billing areas. In total, gray charges constituted $14.3 billion in consumer spending in 2013, according to a consumer protection service called BillGuard.

BREAKING DOWN 'Gray Charges'

While gray charges are not illegal, they lie in a moral gray area. On one hand, consumers technically agree to these charges when signing up for the subscription; on the other, companies may be banking on consumers forgetting to cancel unwanted or unused subscriptions instead of relying on consumers’ active intention to continue paying for them. In addition, because gray charges are typically small, some consumers find it more trouble to cancel or dispute them than to continue paying them.

To avoid gray charges, consumers should read the fine print before signing up for a free trial or subscription using a debit or credit card. Check whether the merchant will automatically charge your card for the product or service when the trial period ends or the subscription is about to expire. Review your monthly statements carefully for unwanted or mistaken charges and contact vendors promptly to cancel unwanted purchases. For gray charges made to a credit card, it may be possible to get the charges reversed by submitting a dispute through the card issuer if the company initiating the gray charges is uncooperative.

RELATED TERMS
  1. Gray Market

    An unofficial market where securities are traded. Gray (or “grey”) ...
  2. Gray List

    A list of stocks that are ineligible for trade by an investment ...
  3. Gray Knight

    A second, unsolicited bidder in a corporate takeover. A gray ...
  4. Debit Card

    An electronic card issued by a bank which allows bank clients ...
  5. Fee Harvesting Card

    Credit cards targeted at consumers with poor credit scores that ...
  6. Credit Card

    A card issued by a financial company giving the holder an option ...
Related Articles
  1. Tech

    4 Ways to Check Credit Card Accounts for Trouble

    Credit cards do offer some protection against fraud, but here are 4 reasons to be vigilant and protect your credit score against scammers and mistakes.
  2. Personal Finance

    Credit, Debit and Charge: Sizing Up The Cards in Your Wallet

    Not all plastic is equal! Learn the difference between the three kinds, and how each can affect your finances.
  3. Personal Finance

    Debit Cards: Why They're Not As Safe As You Think

    Ditching your credit card can be a smart move, but debit isn't yet an equal alternative.
  4. Personal Finance

    The History Of Consumer Credit Rights

    The Fair Credit Billing Act of 1974 gave consumers the power to dispute credit card charges.
  5. Personal Finance

    8 Ways To Avoid Getting Burned By Prepaid Debit Cards

    These cards have many differences from traditional debit and credit cards that can cost you money if you don't know what to watch out for.
  6. Personal Finance

    10 Reasons To Use Your Credit Card

    There are several benefits to paying with credit instead of debit, if you use a credit card responsibly.
  7. Tech

    How To Keep Your Debit Card Transactions Safe

    Debit card use has become more popular than ever, but not every consumer knows what they need to do to make sure they keep their debit card safe.
  8. Personal Finance

    3 New Types Of Credit Cards To Look For

    These three types of credit cards are becoming popular with customers looking to pay less fees and build up their credit scores.
  9. Personal Finance

    7 Tips For Closing A Credit Card

    Learn when it's a good idea to close a credit card, and how to make sure you do it right.
  10. Personal Finance

    Credit Card or Cash?

    Credit cards are convenient to use, but not always the best choice. Here are 5 times you shouldn't pay with a credit card – and 5 times you should.
RELATED FAQS
  1. What are some examples of 'gray' charges on my credit card statement?

    Read credit card statements carefully to avoid gray charges. Find the fine print before making online purchases, and remember ... Read Answer >>
  2. Are 'gray' credit card charges legal?

    Read the fine print and all credit card statements carefully to avoid misleading charges that often go unnoticed on credit ... Read Answer >>
  3. What are some examples of sneaky credit card charges to watch out for?

    Review the most common sneaky credit card charges and learn how to protect yourself from unwanted charges from creditors ... Read Answer >>
  4. What are the differences between debit cards and credit cards?

    Learn how the major difference between a debit card and a credit card is where the money comes from when a customer makes ... Read Answer >>
Trading Center