Sunday, May 24, 2026

Scott Bilker
Household Math™: Car Insurance Payments vs. Credit Card Offer
by Scott Bilker
 
Scott Bilker is the author of the best-selling books, Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. He's also the founder of DebtSmart.com. More about and DebtSmart can be found in the online media kit.

Test your knowledge by trying to solve these DebtSmart, Household Math™ problems! After you complete the problem you’ll get the solution and explanation.
 
1. Your auto insurance bill arrives; it's $600.00 for 6 months of coverage, ugh. Luckily, to make paying easier, they give you the option of spreading this out over 3 monthly payments. The catch is they charge you an additional "convenience" fee of $3 per payment.

The same day you also receive a credit-line check offer from one of your credit cards, with no check fees, that is good for 3-months with a 5.99% APR. What's better (cheaper) to do: take the insurance company's payment plan offer or use the credit line (5.99% offer) check to pay the car insurance in full for $600.00? Technical Note: No matter which choice you make, you must pay off the $600.00 principal in exactly 3 monthly payments.

What's better (cheaper) to do and why?
Take the insurance company's payment plan offer.
Use the credit line (5.99% offer) check to pay the car insurance in full for $600.00.
I don't know!



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