Quote
waterfield
The money you pay is sitting someplace drawing interest-checking account, savings, whatever. By paying early you lose whatever interest you would be earning on that money. At the same time the creditor now has your money and it is in his investment portfolio drawing interest-your interest that you would have earned. So the money you have lost in interest and is now the interest being earned by the creditor is the interest you are paying when you don't have to-assuming you normally pay at the due date.
The problem with doing this is creditors all have different dates when the bill comes due so in theory you would have to diary each "due date" to make a payment at the "right time". That is a pain in the butt and most people like to pay their bills at one time-like me. The other problem is -like I wrote above-by waiting until the actual "due date" you do risk being a day or so late and whatever interest you have saved in your bank account is eaten up by the late charges you now have.
Bottom line is the creditor wants you to pay early because its your money that it can work with. And just figure the millions of people who pay early and the money they can use in their portfolio.
Yeah, ok. Thanks, but... I'm good.
