I recently got a bill in the mail for renewing our local twice-weekly newspaper.
As usual, this cheapskate took a close look at the three payment options.
The first thing I was struck by was that paying in 6-month increments was clearly the worst way to pay. If you paid $55 every six months, you’d be paying $110 a year instead of the advertised $65 per year price.
So then I took a look at what they called the “Best!” choice – a monthly automatic payment of $5.42. And guess what? When you do the math, it’s NOT the “Best!” The annual price works out to $65.04 – four cents more than the one year price of $65.
Now, I’m sure some of you are saying, “Wow, this gal is REALLY a cheapskate if she’s going to quibble over a measly four cents.”
But it’s not just four cents. It’s allowing this company to bill me $5.42 a month to my credit card indefinitely. What the newspaper describes as “Best!” is not necessarily best for me, but locking in subscribers is pretty darn great for them. And if (for some reason) I didn’t pay my credit card bill in full each month, that newspaper subscription would come with interest charges. I’d end up paying MORE than the “Best!” option.
I’m all for convenience. I do have several of our regular bills (like internet, satellite, and electricity) set on an auto pay. But I’ve learned that it’s quite easy to trade convenience for complacency. It’s easy for lifestyle creep to occur when you set up a monthly automatic payment. Sure, it’s only $5.42 now, but then something else comes up and you add a $7 automatic payment and then another $11 monthly payment, and pretty soon, you’ve got $40 or more spent before you even realize it.
And that’s not even the larger things like gym memberships. How many of us (raises hand sheepishly) have our gym memberships drafted from our checking accounts long after we’ve stopped going to the gym?
If you’re the kind of person who has trouble getting bills paid on time, then arranging for automatic payments will save you money. You won’t have to worry about late fees or surcharges for expedited payments.
But if you’re the kind of person that sets automatic payments and forgets them, you may want to stop and take a look at what they’re doing to your budget.
You may find that you’re paying for a convenience that you don’t even appreciate.