We’ve analysed the 11 million quotes run
on car insurance channel in the 12 months to May 2015 and found that
44% of drivers pay by instalment.
This is understandable, given that typical premiums are the thick end of £500 – a hefty sum to stump up in one go.
But the problem is, paying monthly for car insurance adds an average £62 to each policy.
Our stats show that the average premium for drivers paying annually is £452, versus £514 to pay monthly – an uplift of 11%.
But there is an alternative if you can’t or don’t want to settle your premium all in one go.
Zero hour
Here’s how: You take out a zero per cent purchase credit card and use it to pay your premium in one go.
Then you divide your premium by 12 and
set up a standing order from your current account for that amount. So if
your premium came in at £600, you’d pay £50 a month.
And because a zero per cent purchase
credit card doesn’t charge you interest for a given period (anything up
to 23 months), you’d only pay £600 in total. Paying the insurance
company by instalments would probably bring your total bill nearer to
the £700 mark.
You might have to pay a small fee to pay
by credit card – maybe 1% of the total, so £6 in this example – but the
overall savings would still be significant.
Disciplined approach
Here’s a really important point if you
go down this route: you should adopt a disciplined approach and stick to
a maximum of 12 monthly payments, regardless of how long the card’s
interest free purchase period lasts.
That means you’ll have stopped paying for this year’s cover by the time you have to shop around for next year’s cover.
And before you take the plunge with a
new card, check whether you’re likely to be accepted using our credit
card Smart Search facility. If you apply for a card and are declined,
you’ll leave a stain on your credit rating – but we’ll find the cards
you’re likely to be approved for before you make your application.
