By ARTHUR VIDRO
You can save money sometimes by paying your bills quickly.
Most of us know, for instance, that if we make larger payments on our credit card bills, we’ll end up sending less money to the card issuer. It is a simple matter of limiting the interest that grows on the debt. The longer you let the past-due amount build, the greater the interest owed. This applies to most car loans and mortgages, too.
But there are other, smaller ways to save by paying quickly. Here are some examples.
My heating-oil company gives a discount (10 cents a gallon) if payment is made within 10 days of the oil delivery.
Until it redesigned its bills last year, the local Valley Regional Hospital would send out bills with two prices – one for the total due, the other for a reduced total due if payment was made within a month.
I pay promptly whenever it means a discount. I’m also happier knowing that I’m preventing a debt from looming overhead.
Similar to paying promptly, you can sometimes save via pre-payment. This means you get a discount by giving a service provider your payment before the service is provided.
After many years of using the same pest company (what we used to call exterminators) to make quarterly visits and respond to pest emergencies, I inquired about a pre-payment option. Yes, they did offer one. So by paying for a year’s worth of service in advance, they knock a small amount (about 5%) off the price.
Earlier this year I got in the mail a notice from my trash-collecting company announcing that it, too, offered a pre-payment option. Similar deal – pre-pay for a full year and save 10%.
Might not sound like much, but a savings is a savings; and if you’re happy with the service the company has been providing, it makes sense to take advantage of the option. Nowadays, it’s hard enough to get 1% interest from a bank; so if you can save 5% to 10% by pre-paying, that’s not so bad.
Of course, first you’ll need the means to pre-pay. If you’re living paycheck to paycheck, it probably won’t happen. You need money tucked away in savings.
The reward is money saved, plus no longer receiving monthly or quarterly bills for the period in question.
However, there are some risks to consider. First, you’re locking yourself into service with a company for – in my case – a year at a time, so you should be confident that they will continue to provide good service. Do not pre-pay for services from a company that is a stranger to you or whose service has been leaving you less than fully satisfied.
Another risk is bankruptcy. If the company you send your money to goes bankrupt before giving you all the services you have paid for, you will be merely one of many creditors seeking payment or repayment from the bankrupt company, and there is a chance you will lose everything you’ve spent without receiving the paid-for service.
Plus you need to be vigilant to be sure the promised discounts actually occur.
Last week a bill arrived from the pest services company. It had a $113 charge but also an applied payment of $79, and stated that $34 was thus due. I had no idea where those numbers came from, so I telephoned.
After their rep called my account onto his screen, I began my questions. It helps to ask politely, and it helps to figure out ahead of time exactly what you want to ask.
“This statement is dated May 2nd,” I began. “But we didn’t have any service performed that day.”
“No,” the company replied. “The service visit was on the 9th. It’s just that we date our quarterly statements the first Thursday of the month, which this time was the 2nd.”
“This is a quarterly statement?” I asked.
“Yes.”
“And it covers the quarter starting in May, continuing through June, and also through July?”
“Yes.”
“That confuses me,” I said. “Because in mid-August of 2018, I sent you a check for a full year’s worth of services, for the period of August 2018 through July 2019. So the quarter in question was already paid for.”
The chap pushed a few buttons then explained that shortly before or after my payment was made, the company had raised its prices by three dollars and change per quarter.
“That still doesn’t add up to $34 owed,” I pointed out.
The chap put me on hold and spoke to a supervisor. Then came the news. Yes, my annual saving of $22.60 had been erroneously omitted. Instead of owing $34, I owed $11.40.
Which I’ll pay. Promptly.
If you have consumerism questions, send them to Arthur Vidro care of this newspaper, which publishes his column every weekend.
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