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Auto insurance

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Regular Contributor

Auto insurance

Not sure if it's cool to post this in here but my question is my 6 month car Insurance renewal is due this month and It is $578 if I pay whole thing (on a credit card) right now or if I do monthly payments it is $114 a month. My question is should I go ahead and pay the whole 578 using my credit card or should I just keep to monthly payments. I figured if I put it on a cc then my monthly payment would be a little cheaper and I can take what money I save and put it towards cc payments....? They say if I pay whole amount then it saves me like 70 or so ..... Just trying to find ppl who have done this before and did it work well?
Message 1 of 12
11 REPLIES 11
Community Leader
Valued Contributor

Re: Auto insurance

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. 

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Message 2 of 12
Valued Member

Re: Auto insurance

Could work if the card your putting it on has a 0 interest promotion or low rate. Your effectively paying one cc with another cc by increasing the balance on one, to lower the balance on another. So if the money your saving on the insurance is going towards paying off a cc that has a higher interest rate than the one you put the insurance on. You could be saving money. But I would suggest against doing that and just either pay the lump sum in cash if possible or continue to pay monthly in cash. Unless you had a spend you needed to hit on a cc and were going to get rewards I might consider it.
Message 3 of 12
Valued Member

Re: Auto insurance

Oh i misread that, sorry. Yeah could be worth as long as the interest it builds over the time it takes to pay it off doesnt add up to more that 70. I thought you were putting it one cc and making the min payment and taking that difference to pay down another cc.
Message 4 of 12
Valued Contributor

Re: Auto insurance

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.  

Message 5 of 12
Established Member

Re: Auto insurance

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. 

Message 6 of 12
Established Contributor

Re: Auto insurance

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

 

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Message 7 of 12
Established Contributor

Re: Auto insurance


@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.



October 2019:

Stats:
Message 8 of 12
Established Contributor

Re: Auto insurance


@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%)



October 2019:

Stats:
Message 9 of 12
Established Contributor

Re: Auto insurance


@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%)


60.jpg

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Message 10 of 12
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