Generally, you should not pay any convenience fees. However, if you want to analyze each one, here is a way:

Let's say your Auto Insurance (or whatever) charges $2.50 per month convenience fee on top of paying $600 for a 6 month policy. This means you will pay a total of $12.50 in fees (well, technically you will pay a stream totaling $12.50 such that the cost of the earlier payments is somewhat lower than the cost of the later ones, but since these are small amounts in a low interest rate environment over a short period of time, the difference is minute).

Option 1: Pay $600 policy is paid

Option 2: Month 1 $602.50, Month 2 $602.50, Month 3 $602.50, Month 4 $602.50, Month 5 $602.50, Month 6 $602.50

For a total of $612.50. Back of the envelope calculation (not precise but close enough): $15/600 * 2 = 5.0%

More precisely:

To keep things simple, I will annualize:

Option 1: Pay $1200

Option 2: 12 payments of $102.50 totaling $1230.

Plug this into the appropriate calculator at (

http://www.easysurf.cc/vfpt2.htm#rrm):

Annual Interest loan interest compounded monthly

Annual Interest loan interest compounded monthly

Principal = dollars you want to borrow

Enter principal: 1200

Enter term, in years: 1

Enter Monthly Payment: 102.50

Annual interest in percent is 4.59%

This means you are effectively borrowing money at 4.59% (after tax) for the convenience of making monthly payments. The question to ask yourself might be what is my after tax rate of return on my savings? If my tax rate is 25% federal and 5% state or 30% and my savings deposit rate is 1%, then the after tax return on my savings is 0.7%. In this example, you could argue I am borrowing at 4.59% to lend at 0.7%. If I am a bank and I do enough of this, I would quickly become insolvent!!