Paying insurance bill in one lump sum or in payments and letting money earn interest. Is my math right?

Finance
1

I’m trying figure out which will maximize my money in paying a homeowners insurance bill of $4056 due Monday. I have the option of semiannual payments of $2447 now and $1625 in December or quarterly payments of $1637 now, $814 in September, $814 in December and $813 in March. Installments have a fee of $13 for the first and $3 for subsequent payments. My best savings account is earning 5.50% apy.

If I pay semiannual, the $1625 I don’t have to pay now will earn $44.69 from now until December and I only have $16 in installment fees. So paying semiannually nets $29 savings.

What about quarterly? The $2441 I don’t have to pay now will earn $33.56 from now until September and only have $19 in fees. The $1627 I don’t have to pay from September to December earns $20.34. The $813 I don’t have to pay from December to March earns $10.16. So by paying quarterly my money earns $64.06, less $19 fees equals $45 saved.

Is my math correct? Usually paying in installments is the most expensive way, so does this seem right?

2

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3

Gotta add in your income tax rate.

4

Negligible.

5

Then yeah, when savings accounts earn high interest, you can make money even after paying installment fees…

It’s no different then people who pay a fee to charge taxes on their credit card because the cash back is higher.

6

Keep in mind that the rate on the savings account could fluctuate (probably more likely to go down), but the installment plan fees are fixed.

7

It’s a gamble for sure. I have cash equal to my 2.25% auto loan in a 6 month 5.5% CD…but I can cash flow the payments out of my salary. If rates suck in 6 months, I’ll pay off the loan.

8

I was considering the exact same scenario for the same reasons, but I found out that while they take a CC for the single payment, they only do direct debit from checking for installment, so… CC it is.

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