Pre-paying monthly bills?

by Jen (November 21, 2007)

GetRichSlowly recently suggested that pre-paying your bills - i.e., writing big lump sum checks to the vendors you know you’re going to owe something every month - is wonderful. Readers disagreed strongly. What do you think?

Unless you’re going to travel for a few months, I agree with readers that it’s not such a great idea for most of us. I would also add that some companies (Verizon, I’m looking at you) have such pathetic billing departments that I’d never trust them to actually apply the money correctly, and I can’t imagine how I’d sort it all out later (it’s hard enough when they screw up month-to-month). I’ve had the local water department apply my payment to someone else’s account, too. These things happen, and I don’t like to throw anything too creative at billing departments which are not really that good at handling ordinary stuff.

A compromise: make pre-payments to a “bills savings account”. With services like IngDirect.com, it’s easy to stash money away. If you want to put a huge lump of cash in there when you have it, then pay your bills out of that stash, that might be a way to accomplish the benefits GRS found without making the sacrifices the readers warned about.

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