12-06-2012, 04:34 PM
Kakarat Wrote:Maybe I should explain myself a little more with an example. Say you are paying $1200 month. Split into 4 payments or more. But 4 payments of $300 a month for simplicity. By the time the compounded daily interest adds up with a one time payment of $1200 you are paying more unwarranted interest than the 4 payments of $300. Even if it is $50 a year you are still keeping that money in your pocket instead of handing it over to the bank. It is just the way the system is set up, the bank never tells you that you can split your monthly payment up 4-6 times to save that little bit. The more money they make, the happier they are.
Yeah, I get what you are saying. In this example you are right, it is beneficial to do that. I was referring to people who make additional payments on their principal through the year; like a common thing to do is pay every 2 weeks so that you are making an additional payment every year.