Think about the services you use that renew once or twice per year for a hefty amount, like, for instance, car insurance. The default option you probably see is you pay that bill over the course of several months instead of all at once. At first, you might be relieved to not have to pay up front. But if you can manage the entire bill in one fell swoop, you could save anywhere between 5 percent and 15 percent for paying in advance instead of monthly. If you don’t see an option for this on your billing statement, call your service provider and ask if there’s a discount for paying up front.
Beyond the savings, paying up front is usually a flexible arrangement. You may be ready to pay your annual premium or other service fee this time, but the next time that service renews, you can usually switch back to monthly payments if your financial situation has changed. You won’t get the same prepayment savings if you do, but you won’t have to deal with credit card or other interest fees in order to spread out those payments once again.