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

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?

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Gotta add in your income tax rate.

Negligible.

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.

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.

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.

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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