Save Stamps – Pay your bills online, Float Cash

Another idea that might seem obvious to many would be saving money by not using stamps to pay bills.  Starting January 22, 2012 stamp prices will increase to 45 cents a piece for first class.  Here is a table to help you visualize how much you could save per year by using the web to pay your bills, if possible.

Not every business accepts payments online, but saving on stamps isn’t the only benefit of paying online.  For example, the post office could lose or accidentally destroy your bill payment.  This would leave you out a stamp and stuck with a surprise the next month.  However, if you had paid that bill online, you would know have confirmation of your payment instantly.

Also!  You can take advantage of the cash float principle.  For example, many businesses will allow you to schedule your payment for a future date.  If you have the option of scheduling this payment an credit card that recently entered a new monthly cycle, you could delay your actual payment of the bill.  Big business uses this principle all the time to make money.  For example, insurance companies will delay payment of benefits to doctors by denying claims or holding payments for a variety of reasons.  This allows them to keep that money in there accounts earning interest for a few more weeks.

Here is the principle explained in real world numbers.   You receive a $100 electric bill on December 5th due on December 21st and they allow you to schedule a credit card payment.  Your credit card enters a new cycle on December 18th.  You schedule the payment for December 21st to be deducted from your credit card.  Next, you credit card company sends you a bill on January 18th that includes the $100 utility charge.  You wait until the February 10th(the credit card due date) to pay off your credit card balance.

Here is how much money you saved.  One percent cash back for paying on your credit card($1).  Interest on the $100 cash you kept in your account rather than paying immediately( ~ 7 cents at 0.76% in your interest bearing checking account).  This is a small example but repeated several times a year with several bills can yield a few hundred dollars in interest.  (Also imagine the type of interest insurance companies earn by delaying payments!)

Photo used under Creative Commons from nate steiner