![]() And, if you forget to set an expiration date, you can always lock your virtual card at any time to avoid being charged a subscription rate.Ģ.Set your virtual card to expire before the free trial period ends-this way you won’t get pulled into paying for a subscription.Use a virtual payment card to set spending limits on how much companies can charge you.Want to curb your habit of delaying your psychological pain with free trials? Here are 3 tips to keep you safe: A free trial reduces this activity in the insula-where the pain only begins much later when we realize the true cost of our avoidance to pay. Through comprehensive studies, Drazen found that cash payments trigger activity in the insula, a brain region that's associated with negative feelings of pain. Here's what happens in our brain during this "free" trial process: Drazen Prelec, professor of management science and economics at the Massachusetts Institute of Technology's Sloan School of Management, is an expert in the field of neuroeconomics. The pain of paying doesn’t kick in until, for example, you’ve overdrafted your bank account because LinkedIn went ahead and charged you $750 for a year’s worth of LinkedIn Premium once your free trial expired. ![]() Inputting your credit card for a free trial doesn’t feel like spending money, so you do it. A big example of this from the world of subscription services is the so-called “free” trials that ask you to input your credit card information at the point of signup, so they can start charging you once the trial period ends. But if we don’t see that money disappearing, we don’t feel the pain as much. Our brains are wired in a way that makes us associate negative emotions with the physical sight of money changing hands. The pain of paying is rooted in our tendency toward loss-aversion: we fear losing more than we appreciate gaining. The term for this phenomenon is ‘the pain of paying,’ and it was first theorized by Ofer Zelermayer in 1996. ![]() But parting with that same $100 as a paper bill? It's a lot more painful. Have you ever noticed how paying in cash feels a lot more painful than paying with your credit card? It's easy to swipe your card, pay $100, and not even think about it. The pain of paying: Why Apple Pay feels so much better than cash And while you ultimately can’t change your psychology, you can at least equip yourself with the awareness to know when you’re being irrational. There’s a lot of science behind why we subscribe, why we love to pay via subscription, and why we avoid hitting the cancel button. And yet people are signing up for more and more new products and services every year as more of the world gets on the subscription model. ![]() We avoid canceling things for no good reason. Our innate irrationality leads us to do things like surround our homes with security cameras even though crime has never been lower (the availability heuristic) and overvalue items we had a hand in building (the IKEA effect.) Subscription services are one of the places where the irrationality of human behavior is most on display. According to behavioral economics, “irrationality is the real invisible hand that drives human decision making,” as Duke professor and prominent behavioral economist Dan Ariely wrote in the aftermath of the 2008 financial crisis. Behavioral economists blew that theory out of the water. Classical economic theory held that humans were basically rational actors.
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