Direct Debit is probably the easiest way of paying for things such as car and home insurance. But it’s not necessarily the cheapest.
Recent research by MoneyExpert.com suggests that by paying by Direct Debit, you could be paying up to 21% more for your car insurance, and 19% more for your home insurance, than you would be if you paid off the annual fee with a lump sum.
Insurers are often willing to let you spread the cost with monthly premiums, but in effect they see it as giving you a loan, and therefore add a bit extra to the premium.
If you can trust youself not to spend your savings, it might be an idea to save up during the year to pay off the annual fee in one go, or pay it off with a low-charging credit card.
A lot depends on your circumstances, and the cost of the premium involved, but the savings that could be made can be quite substantial.
This post forms part of the Money Saving March series.