An Amazon Prime membership has its upsides: fast shipping, streaming services, food delivery perks and extra savings year-round. Many of these benefits come in handy during shopping events like Prime Day or Lightning Deals and can quickly offset the $139 annual price tag. But not if it's causing you to overspend or blow your budget.
Lanesha Mohip, founder of Polished CFO
Yes, your Prime membership can be convenient for fast shipping, and you may find deals that help you save big on essentials. However, if you can't take advantage of other Prime membership perks or don't spend enough to justify the annual fee, your money may be better served earning interest in a high-yield savings account or on another subscription or membership you use more often.Â
Subscription creep costs us more than $1,000 a year, according to an April CNET survey. As an accountant, I know how quickly forgotten expenses can eat into your budget. If you're on the fence about canceling your current Prime membership, here are five clear signs it's time to go your separate ways.
1. You don't shop Amazon regularly
This probably goes without saying, but if you order from Amazon only a few times a year, you might be paying too much for two-day (or same-day) shipping and other savings to justify the cost.
If you only shop the event on future Prime Day or Black Friday, you might consider getting added to a friend's Prime account or forgoing the membership altogether. What you're saving by shopping deals may be considerably less than what you're paying for an annual membership.
2. You can't take advantage of other Prime perks
Even if you don't shop on Amazon often, there may be reasons to keep your membership if you can get value from the service's other benefits. But if you can't, it might be time to hit that cancel button.
You also want to weigh the other perks Amazon membership offers, like free Grubhub Plus, Prime Video and additional discounts at Whole Foods. Prime Video, Music and Reading are nice add-ons. But if you already have other video, music and ebook services you like better, they might not add much value to the cost. Take the time to audit all of your digital subscriptions, cancel those you rarely use and set a calendar reminder for any trials you're currently testing to avoid paying for another one.
3. You spend too much on Amazon
If spending too little doesn't justify a Prime membership, surely spending a lot on Amazon does. Not always. Having Amazon Prime might actually encourage you to spend. In fact, Prime members spend an average of $800 more a year at Amazon than non-Prime members.
You may find yourself overspending because Amazon makes buying things from your phone easy and convenient. But how can you really tell if you're overspending? Well, if you're racking up credit card debt to pay for Amazon purchases, you're not only spending beyond your means, you're always likely paying hefty interest charges on your credit card bill each month.
If you're not in debt, that doesn't mean you're in the clear. To know for sure, you have to take a close look at your order history. Look at every single order over the past year. Think about what caused you to make the purchase, how much you spent and even how often you use the items now. Then ask yourself a few questions:
- Do you regret any of these purchases?Â
- Were there items you meant to return but didn't?Â
- Are there any purchases you don't even remember buying and have no idea where these items are?
If you said "yes" to any of the above, you may want to rethink your membership or cut back on your spending. I recommend setting a small Amazon budget each week to help you start on track.Â
4. You're not taking advantage of family plans
If more than one person in your household uses Amazon, you might be doubling your costs by paying for individual plans rather than sharing your Prime account with other family members by adding them to your Amazon Household. This service is free (well, minus your yearly Prime membership fee) and allows other family members to use your Prime account to enjoy the same benefits. And by splitting the cost with your loved ones, you can save some money too.Â
5. You rarely return unwanted Amazon purchases
Amazon makes shopping convenient, but let's be honest -- managing returns is a pain. Even though Amazon offers returns in stores nearby (think Whole Foods, Staples and Kohls), going to a physical store can be a hassle. So that item sits. And sits. And now you're past the return window. You can try selling the item on Facebook Marketplace or Offer Up to get some of your money back, but it's not a great solution to the problem you're facing.Â
If you know you won't return items because it's not convenient, you may want to rethink your Prime membership. Go through your order history and add the total for items you wanted to return and didn't over the past year. If that number helps you realize the value of driving to the store to return unwanted items, then keeping our membership could be worthwhile. But if you know you won't go through the effort of making a return, you're losing money while also paying for a Prime membership. Canceling it can help you avoid the temptation of ordering yet another item you realize you don't need.
Is a Prime membership worth it?
Your Prime membership is packed with value, especially the convenience of online shopping and fast delivery. But if having access to Prime has increased your impulse spending and you’re struggling to stay within your budget, look for ways to rein in your spending. If you’re worried Amazon Prime is too much of a temptation, then it’s time to say goodbye.
