Yellow's Green

The Adventures of Money Blog.

Thursday, July 06, 2006

Loan Trouble

There's a great reason to have a good buffer in any of your withdrawal accounts.
I keep a $200 buffer in our checking account, to cover any forgotten about or mistaken withdrawals. I chose $200 because we have $150 set up to auto-withdraw for our IRAs every four weeks, and $25 for the 529 plan once a month.

I had my student loan payments set up for auto-withdrawal once a month as well, but I've been paying them online instead, so that I can pay more than the monthly minimum. Last month, I noticed the option to change due dates. I thought it would be a good idea to change the due date to the 1st of the month, like most of our other bills.

When I was going over our money last week, I was confused for a while that we had some missing money, until I figured out that the loan auto-transfer had taken place, even though I'd already paid that month's bill online. With that on top of accidentally taking our weekly cash out of checking instead of savings, I was grateful for the buffer. No overdraft fees!

To my surprise, the auto-deduct happened again this week! Last week, it was on the old due date, this week, it was on the new one. Thankfully, there was still enough in the buffer.

The only question I have now is on the interest my loan is charging me. They charged almost the same amount of interest on both deductions - even though there were only a few days between them. That doesn't make sense to me. If they're charging an annual percentage rate, one month and a few days worth of interest should be different dollar amounts, no?


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