These banks make it tough to pay off our cars!

I don't know about you, but the Clewis Clan has some debt that we are actively working on paying off.

If you've heard our story, you know that Boyd and I paid off over $33,000 in debt and bought a new house in a single year. But that wasn't the end of our debt. Between two cars and my hubby's disrespectful student loans, there is still some stuff that needs to be paid off and believe me when I say we're intensely focused on it.

Yes, my car is orange. No, this is not the actual car. My car is never this clean, lol

So a few months ago (before I paid off the car completely), I paid off $2,600 on one of those cars, but it was TOUGH! really wasn't that hard. It was just really inconvenient. Like, I had to physically go to two banks to make the payment instead of simply logging onto my computer. In fact, I almost took the easy way out, but the easy way would have cost me money.

Which is the reason I'm telling you all of this. Let me breakdown exactly what I did and how each of those steps saved me money (and can save YOU money as you pay off debt for your family or your business).

First, on the website for the bank that owns our auto loan, I couldn't immediately figure out how to make a "principle only" payment. After 20 minutes searching the help menus, I discovered that I have to either mail in the payment or visit a bank branch, neither of which were convenient.

  • Why does this matter? When the interest due on a loan is calculated, the calculation is based on the principle balance on the loan (i.e. what you actually owe the bank). A "principle only" payment directly reduces that principle balance by 100% of the payment amount. Had I made the $2,600 payment as a regular payment instead of principle only, they would have applied part of the payment to interest, thus reducing the total amount that I had paid on the actual balance.

  • Money saved: Roughly $187 in additional interest paid to the bank.

Second, I went to the bank branch to pay using my debit card and was informed that the transaction would be processed as a "cash advance." That meant walking out the door and heading down the street to the bank that held our bank accounts to get a cashier's check or cash, then returning to this branch to make the payment. SIGH.

  • Why does this matter? "Cash advance" is a fancy term for loan. Essentially, the bank was going to "advance" (read "loan") me the $2,600 until my other bank was able to send over the funds...charging me interest, of course. The average cash advance has an APR of 20% - 30%. In my case, it's around 26% and it would have been taken out of my payment.

  • Money saved: Roughly $2 to $20 (or more) depending on how long it took for the money to be transferred and the "cash advance" settled.

Third, at the bank that had all my monies, I was informed that cashier's (bank) checks over $1,000 had an $8 fee depending on the type of account. I opted to take out cash for the transaction instead of a cashier's check, in spite of my aversion to carrying more than $200 in cash at any one time.

  • Why does this matter? The lesson here is to always ask about hidden fees on bank accounts and transactions before you set them up or process them.

  • Money saved: Exactly $8 in lovely bank fees

Once I got the cash and went back to the bank with the auto loan, it was a really quick and easy process. But at any step during this journey, I could have taken the easy way out and paid extra money for convenience. Think about it, I saved up to $215 today just by doing the extra work...

And it was worth it!

The moral of the story is simple - do the research and do the inconvenient work when it comes to paying your debts. It'll save you money in the long run.

And who doesn't love saving money?

Tiana B. Clewis