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If you have the money lying around, I would say to go for the lump sum payment. Saving is saving. If you don’t have the cash, though, and you want to use a CC, make sure the interest charged won’t cancel out any savings.
I would not look at credit card payments as a comparison. The interest is a significant factor to consider, probably would be less than $70 if you did pay the balance in the same 6 months but based on my experience it is not a good habit to get in to put things on a credit card that you can't pay in full the same month. I would pay the extra $11.66 a month and not take a chance of adding to your credit card debt.
Personally, I pay the lump sum from savings, divide that amount by 6 and put that amount back in to savings every month (so if upfront I took $330 from savings, I would put $55/month in savings for 6 months) That way at the end of 6 months you have replaced what you took from savings and still gotten the lower rate by paying it all at once.
114 per month for 6 months = $ 684
684 - Lump Debt of 578 = $109 loss
109 over 6 months on 578 = over 60% interest
Best pay the 578. (Zero interest lost)
If you can't it would cost you less to put it on CC and make payments of $114 every month than pay the insurance company's 60% interest.
Most credit cards are between 11-28 %
18% = $28 interest
25% = $40 interest
$28 or $40 is less than $109
@ooeemusic wrote:Personally, I pay the lump sum from savings, divide that amount by 6 and put that amount back in to savings every month (so if upfront I took $330 from savings, I would put $55/month in savings for 6 months) That way at the end of 6 months you have replaced what you took from savings and still gotten the lower rate by paying it all at once.
That's exactly what I do! Except, when I found out I could pay it with my credit card, I used my Discover for the cashback, and then paid off the balance the next day. Win-win.
@Kforce wrote:114 per month for 6 months = $ 684
684 - Lump Debt of 578 = $109 loss
109 over 6 months on 578 = over 60% interest
Best pay the 578. (Zero interest lost)If you can't it would cost you less to put it on CC and make payments of $114 every month than pay the insurance company's 60% interest.
Most credit cards are between 11-28 %
18% = $28 interest
25% = $40 interest
$28 or $40 is less than $109
The interest rate should be 32.28% (not 60%)
@KLEXH25 wrote:
@Kforce wrote:114 per month for 6 months = $ 684
684 - Lump Debt of 578 = $109 loss
109 over 6 months on 578 = over 60% interest
Best pay the 578. (Zero interest lost)If you can't it would cost you less to put it on CC and make payments of $114 every month than pay the insurance company's 60% interest.
Most credit cards are between 11-28 %
18% = $28 interest
25% = $40 interest
$28 or $40 is less than $109
The interest rate should be 32.28% (not 60%)