Cutting payments as late as possible: More trouble than it’s worth?

My grandfather was an extremely frugal person. (As I suppose many people who lived through the Great Depression of the 1930s were.) One of his frugal habits I remember was that he used to walk downtown to pay his bills in full by check, on the day they were due. In this way, he got credit for paying the bill on time, and the money in his checking account was earning interest as long as possible.

I’m sure he did this before I was born. Overall, I suppose it was part frugality, part excuse to get some exercise, but a small amount of organization on his part probably paid pretty well over the years. Interest rates were in the mid-single- to low-double-digits. A few pennies here and there for each bill he held off paying for as long as possible add up and compound, probably to the tune of a couple thousand dollars.

Now, though, it’s almost not worth the risk to pay things close to when they’re due. If I remember that a bill is due soon, I pay it, even if it’s a couple of weeks before it’s due. A couple of factors are to blame for this:

Checking account deductions happen a lot more quickly than they used to. It used to be a couple of days or more to clear a check. Now it’s a lot faster, sometimes almost instantaneous. So much for that extra two-day cushion for keeping your money.
Interest rates are in the toilet. When the difference for waiting to the end is literally 2 cents on a $50 bill, the incentive vanishes. Do that for a year and I won’t even be able to buy a cup of coffee with the savings.
Late payment cutoffs are razor sharp. With some businesses you can’t miss paying on time by so much as a minute. Late is late, and they know it’s late that accurately.

Basically, there are far more fruitful ways to make money than playing this game. I say don’t bother.

Do you have any other money-saving tactics that used to pay off, but are now just a waste of time?

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14 Responses to “Cutting payments as late as possible: More trouble than it’s worth?”
By 101 Centavos on Jul 19, 2011 | Reply

I usually pay bills well before they’re due. Not worth the hassle to manage things down to the wire.
By jana on Jul 19, 2011 | Reply

i agree with 101. it’s not worth the gamble to wait until the last minute.

i can’t say that i have any tactics that used to pay off that don’t anymore, except for the interest rate on my ing account dropping from 4.5% to 1.1%. but that’s not really a tactic, i guess.
By Money Beagle on Jul 19, 2011 | Reply

Used to be that you could drive to the gas station that had cheaper gas and save a little. Now prices change so often that it might be higher by the time you get there, in which case you’ve wasted money instead of saved it!
By Suba on Jul 19, 2011 | Reply

I pay them almost 10-15 days before they are due. Even if I forget one time that will wipe out all the savings I accumulated through years with a 0.01% interest rate.

We used to have a few different credit cards, so that we could get maximum rewards. Now most of the rewards programs are not worth the effort. We just use 2 cards pretty much all the time.
By Amanda L Grossman on Jul 19, 2011 | Reply

It used to be worth it to shop at the Kroger’s near us in Houston because they doubled and tripled coupons. Well…they stopped that policy this year. I no longer shop there!
By Jackie on Jul 20, 2011 | Reply

I used to shop with coupons but rarely do now since they don’t seem to be on the things I buy as often as they used to be. Or maybe I’ve just changed what I buy…
By Kay Lynn @ Bucksome Boomer on Jul 21, 2011 | Reply

I do hold off on paying property taxes until the week before the due date. All other bills I pay well in advance.
By Squirrelers on Jul 22, 2011 | Reply

I had a friend back in college (years ago) who always used to fill up a penny or two above a whole dollar amount, and then take the overage from the take-a-penny jar at the cashier. The idea is that doing this once a week will net him a free gallon of gas.

Of course, doing the math, you can tell that this was quite a while ago. Not worth it anymore:)
By Buck Inspire on Jul 24, 2011 | Reply

Nice post. In the past I waited close to the due date, but I got hit with a late fee when a glitch happened or I just plain forgot. I’ve been lucky as I managed to reverse the fees, but I did waste time and time is money! Is it really worth a few pennies on every $50? Thanks again!
By Crystal @ Personal Loan Comparison on Jul 25, 2011 | Reply

Pretty much anything that wastes my time is a no go for me. I rather give up the extra 3 weeks of interest and have the peace of mind of knowing all of my bills are paid…
By Melissa on Jul 26, 2011 | Reply

As you mentioned with the razor sharp cut off time, the late payment fee costs a fortune. This is definitely a tip not worth following any longer.
By freddie on Jul 27, 2011 | Reply

For me time is money and paying on time has always saved me many hassel.Living on a budget is one of the most difficult things that many Americans will ever face. As a matter of fact we have the nasty tendency to live at the very edge of our abilities and over extend ourselves heartily. A good method for learning to create and establish a budget is to make a list of all your monthly spending right down to your miscellaneous expenses and convenience store and break room snacks and stops and also writing down when to pay the bills promptly which could save lots of late payment fine…. Then add up the totals and see where you believe you can cut costs. Of course it isn’t enough merely to say you want to cut costs in certain areas, you need to create a plan of action for doing so.
By Khaleef @ KNS Financial on Aug 9, 2011 | Reply

I think it’s too much of a risk to play this game. With online billpay, I guess it isn’t as unpredictable as in the past, but I would still like to have a couple of days just in case something crazy happens!
By harry on Aug 11, 2011 | Reply

It is quite interesting. I think interest rate during 1930s might be 5% or higher.