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Pay a bill early and paying a bill twice in a month RRS feed

  • Question

  • I have always wondering if I was doing this wrong in MS Money, but is there any problem paying a recurring monthly bill before it's due date?  Will this screw up the forecasting models in MS Money?  Also, what if I make two payments to a bill in one month?  Whenever my wife and I have extra money we try to make an extra payment to a credit card.  We were told this help avoid finance charges. Thanks!

    Friday, October 26, 2018 1:56 PM

All replies

  • Pay Early

    If you go into Bills and Deposits and pay a recurring bill before it's scheduled due date, the payment will have today's date and the next due date will be the next scheduled payment date.  So if you have a bill scheduled to be paid in June at the end of the month and you pay it in early June, the June payment will have the earlier date and the next scheduled payment will be late July.  The only effect on the Cash Flow Forecast is that the payment appears earlier in time, so the forecasted balance decreases sooner than it would if the payment had been made as scheduled.

    Pay Twice

    If you decide to pay twice in, say, one month, then you can pay once using the scheduled payment for that month, and then make a second payment without using the scheduled bills and deposits.  Just enter that payment directly into the account and note that it's an extra payment in the memo field.  Doing this will decrease the the forecasted balance by the amount of the extra payment.  That is, of course, what is happening, so the forecast remains valid.

    My comments on forecasts apply to the Cash Flow Forecast of the account that is used for the payments.  Other tools in Money, such as budgeting, are more complicated.  The effects of an extra payment of a scheduled bill depend on exactly how you have things set up.

    Finally, anything that reduces your credit card balances will reduce the finance charges.  This is a good thing.


    Bill Becker

    Saturday, October 27, 2018 3:03 AM
  • As Bill says, anything that reduces your credit card balance is a good thing.

    If you pay the outstanding balance, in full, on the due date no finance charges will be added to your next monthly bill. Nothing is gained by paying the whole outstanding balance before the due date, and you will have lost fractionally by handing over money that could have been earning you interest in a savings account for a few days. Many credit card companies, certainly in UK, allow you to set up a variable Direct Debit which will pull the whole outstanding balance from your current account exactly on the due date ~ this is how I have my finances set up.

    Be aware that credit card companies do not regard clients who pay off the whole of the outstanding balance on the due date as their favourite clients ~ they far prefer clients who owe them a lot of money, consequently incur high finance charges, but have an absolutely secure job with (for example) the government (so the credit card company can be sure of getting all of its money back eventually).

    Teabag 

    Sunday, October 28, 2018 4:36 PM