## The loan company is LYING to you!

If they are compounding interest daily that means if they are charging you say 10% interest on $100 that is $10 interest for the first day. Then they compound that interest into your principle balance so the second day they are then charging 10% interest on $110 and the interest is $11 the third day is figured on $121 and the interest is $12.10. etc. through the 309 day billing cycle so it can really build up. Of course if it’s 10% interest per year the amount of the daily interest would be much smaller, but it would still add up.

So yes the quicker you pay on the bill the lower your interest will be and the more you will save in the long run over all. The important thing is to remember to pay enough to cover your minimum in each statement period. I pay a minimum of once a week on our Best Buy bill and in the last four months saved around $87 in interest on their compounded daily interest rate as a result. I make big payments on each pay day and little ones as a bit of extra cash comes in. If it’s only $5, then $5 goes on, if it’s a sudden large windfall then the entire windfall goes on. That card is at 9.9% annual interest rate (see why I hate it) and six months ago the balance was roughly $5,000 and I’ve got it down to $2300 in four months by nickel and diming it to death.