Just recently, I was reviewing my auto insurance bill and realized I was being charged a $5 monthly fee for electing to pay my balance over a monthly basis vs. full payment every year. Even though I have setup most of all my monthly bills on automatic payment with the electronic bill payer provided by my bank, I am still charged this fee, costing my $55 per year.

Trying to understand my options, I decided to call the customer service line of the insurance company. Never missing a payment over 2 years, I voiced my frustrations with this additional fee. The customer service rep provided my an excellent option of maintaining the same monthly payment amount while removing the $5.00 fee with the electronic funds transfer program. This is simply the same thing as my automatic bill pay, the only difference is that the insurance company exercises the funds transfer using a voided check to setup the program. Under this program, I have also moved away from an 11-month payment plan to a 12-month plan for the same premium owed picking the same day every month that the payment should be initiated by the insurance company.

Example:

Before:Owing a insurance premium of $1,000 for the year, I was making 11 monthly payments of $95.91 usually due towards the beginning of the month. This amount represents 1,000 divided by 11 equaling $90.91 plus the monthly $5.00 fee.

After: Same insurance premium of $1,000/year, I will make 12 monthly payments of $83.33 initiated by the insurance company on the 9th day of every month.

So you can see how by contacting the company and understanding my payment options, I was able to save $55.00 at a minimum, not counting the interest earned by stretching out my payments over an additional month. Each month, I will deposit this savings into my net worth to help me reach my goals.

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