Pay bill now or later?
If you've got the money to pay the bill today, do it. They are giving you a 25% discount if you do. You won't find an investment that will beat that.  Let's look at the details of your scheme.  Instead of paying $1696 today, you decide that you will pay $2261 over 60 months, or $37.68 per month.  You also decide to invest $1696 today, and expect to get 6% return each year. Your investment gets you $102 each year, but you have to pay taxes on that.  If you are in the 25% tax bracket, you only keep $76 (ignoring state taxes).  In addition, the loan is costing you $452 in payments each year. At the end of the 5 years, you will have paid $2261 to the hospital, and your $1696 investment will be worth about $2123 after taxes. Instead, let's say that you paid the hospital $1696 today, and invested the $37.68 per month.  At the end of 5 years, assuming the same 6% growth and 25% tax bracket, your investment will be worth $2552. In order for you to come out ahead by investing today and paying off the hospital over time, you would need to get at least a 17% growth on your investment.  If you are ignoring taxes, then the number you need to hit is at least 13%. Conclusion: You will come out ahead by paying the hospital today, and investing the monthly payment plan that you avoided. (Note: Bankrate has a very handy investment calculator that makes it easy to calculate returns on a monthly investment.) Now, let's look at the ethics of the situation.  Assume that you were able somehow to find an investment with a guaranteed return high enough to come out ahead with your plan.  Should you do it? The hospital has provided you a service, and you owe the money.  As a public service to people that cannot pay the bill, they allow people to pay off the bill over time at no interest.  However, you are not one of these people.  You have the money to pay.  It is not ethical, in my opinion, to use the hospital's money to invest and try to profit. Another, perhaps simpler approach to the same result as @BenMiller. Firstly, if you can pay off the debt today, for 1695.70 cash, then that is the amount of your debt to the hospital.  There is no such thing as a discount for cash; just extra money to pay if don't pay immediately.  This extra money is called interest, and the hospital is indeed charging you interest. Use any mortgage program to find the interest rate if you pay off a debt of 1695.70 with 60 monthly payments of 37.68.  The program should tell you that you are paying 12.64% effective annual interest. If you can earn more than that, after taxes, with your money somewhere else, then invest the cash there and pay off the hospital over time.  If you can't, then pay off the debt immediately, and avoid writing 60 cheques. EDIT:  Incorrect calculation revised as per @Ben Miller
FASFA financial aid formulas determine 'expected family contribution'.  For example my alma mater now has a 'list price of over $65k/year.  The average student today actually pays $42k/year after grants.  Students with rich parents pay more than that.  Students with poor parents pay less than that.  Lets say list prices for my kids colleges average $110k/year while they are in school.  If we 'only' make $200k then based on our income alone, EFC would start in the low $50ks per year.  If we have $1M saved in taxable accounts, 529s, rental properties, etc, then we also have to pay 5.64% of the value of those every year for the eight years my kids will be attending - an *extra* $56.4k/year every year for 8 years.  If that $1M is in assets that don't count such as retirement accounts and equity in primary residence, then it doesn't increase the price my kids are billed.  That's a pretty big incentive to put everything I can in home equity, Roth IRA, Spousal Roth IRA, traditional 401k, after-tax 401k, and HSA.  If I could afford to save more I'd switch from traditional to Roth 401k and pre-pay retirement taxes at a higher marginal rate rather than have the savings on the side subjected to the college wealth/income taxes which are effectively a much higher difference between the 25% (now) and 15% (later) federal tax brackets.  Profile and consensus formulas have slightly different percentages and count some home equity if you have an expensive house, but the general idea is the same. On the one hand, it's a great idea to open a Roth IRA now, once you've got the cash to contribute. It's a tax designation sounds like it would fit your meager earnings this year. The main reason to open one now rather than later is that some types of withdrawls require the account be aged 5 years. But you can also withdraw the amount you've contributed tax free any time. Student loans right now are pricey, so if you're carrying a balance at say 6.8 percent fixed you should pay that down ASAP. Beyond that, I'd keep the rest liquid for now. Having that kind of liquid cash is extremely reassuring, and many of the biggest returns on investment are going to be in your personal life. More fuel efficient vehicles, energy efficient appliances, computer backups, chest freezers and bulk meat purchases, etc.  One example I see every six months is car insurance: I can pay for six months in full or I can pay a smaller monthly bill plus a small fee. That fee is well above current market rates. You see this everywhere; people searching for lower minimum payments rather than lower total costs. Save your money up and be the smart buyer. It's too damn expensive to be broke. "I know this an old thread, but one that caught my interest as I just moved to the USA from Australia. As per the OP I had never written a check in my whole life, and upon arriving in the US I was surprised as to their proliference. In Australia pretty much all bills you receive can be paid in a number of ways:  For small amounts between friends cash is probably used most, but for larger amounts direct transfer is popular. Your friend/landlord will give you their bank account number and BSB number, which identifies their bank, and then you transfer the money in. We don't have a SSN like some other countries. Cheques are still used by some however, esp by the older generations. Now that I'm in the US initially I had tried to set up direct transfer to pay my rent however the bank has a $1000 daily transfer limit. I contacted the bank to get this increased however I was informed that this limit applies to ALL accounts at the bank. I asked how do people pay their rents with this low limit and was told that most people used cheques. (This explains the strange look I got from my landlord when I asked for their bank account details so I could pay the rent!) I now have some bills to pay here and I use online banking. You enter the biller's name and address and then the bank actually prints off a cheque and posts it to the biller on your behalf! My first couple of pays here were also cheques, which were the first actual ""paychecks"" I had ever received." "statement at the end of ""Betting On Zero (2017):  &gt;To settle the complaint the FTC required Herbalife to pay a $200 million dollar fine and ""fundamentally restructure its business"". &gt; &gt;Herbalife's CEO Michael Johnson described the TFC settlement as ""an acknowledgement that our business model is sound."" &gt; &gt;Four months later he announced he was stepping down as DEO of Herbalife. &gt; &gt;On December 21, 2016, Donald Trump named Carl Icahn *(zillionaire, portrayed in the film as an advocate of Herbalife's deceptive business model)* special advisor to the President on regulatory &gt;reform.  [another perspective](http://fortune.com/carl-icahn-bill-ackman-feud/)  [my take](http://imgur.com/a/ESRH5)" "It is going to save you more money in the long run to pay at once with cash. If you take out a loan, you will pay interest on the balance, costing you money. If you pay off the balance immediately, there is no difference between the options and your question becomes irrelevant.  There is no credit rating benefit to placing large purchases on your cards, especially since your credit is fine. My advice is to pay in cash in this case, mostly because it makes you 'feel' the purchase. This is what you are describing in your question. This instinct helps you recognize potential problems, instead of masking them with debt. Questions like: ""Do I need this?""  ""Am I overextending myself financially with this purchase?""  ""Am I holding enough cash-on-hand for emergencies?"" You may be fine in these areas, but I would still argue that cash makes you a better buyer because the expense feels much more significant, making you more cautious and discerning.  You are right to feel these things before dropping a large sum of money. Let it inform you and help you make better decisions. Don't mask it or be paralyzed by it!" "It's your business to pay what you owe but it's not your business to determine what you owe.  The ""Fair Debt Collections Practices act"" FDCPA proscribes certain steps creditors must go through to contact you.  You appear to not have received any active contact or demand, but you can still cite the FDCPA to make it their problem. Write to the creditor's address (I assume its the hospital, the OP isn't clear), use USPS Certified Mail Return Receipt Requested, asking them to validate that you owe this debt by mail in 5 days, as is your right under the FDCPA.   If they get back to you and you agree (or its reasonably plausible) you do owe it, pay it especially if it's on the order of $100.  At least you will know it is settled at the source.  Cross reference to your insurance claims to be sure its not double billed or a miscredited copay, but you may see many legit separate charges from one ER visit (hospital,  doctor, anesthesiologist,  etc) and it would not be the first time a medical billing system crapped the bed. If you don't hear anything after a few weeks, use the credit report protest process (or write to them, cc: the Federal Trade Commission) contesting the validity of this report.  The creditor did not respond to your FDCPA request for validation (copy of the Return Receipt); and you otherwise believe you are current with the hospital.  Per the Fair Credit Reporting act,  they must investigate.  Fight bureaucratic fire with fire: conduct all business by mail, and make liberal use of certified mail return receipts.  Its a $6 way to telegraph you know that they have specific federal law timeliness requirements; and you have a federal timestamp signed by someone in their organization." I'm really going to go against the crowd here--paying it too fast could be a problem. The thing is you want them reporting that you paid the bill as agreed.  To do that you need to pay the bills--which means you need to leave the charges there to get billed for.  Paying less than the total is fine, paying as soon as they bill you but before you even get the bill is fine. From my understanding by paying your bills more than 5 days late will not lead you into bankruptcy or stop you from getting a new loan in the future, however it may mean that lenders offer you credit at a higher interest rate. This of course would not help you as you are already struggling with your finances. However, no matter how bad you think things might be for you financially, there are always things you can do to improve your situation. Set a Budget The first thing you must do is to set a budget. List down all sources of income you receive each month, including any allowances. Then list all your sources of expenses and spending. List all your bills such as rent, telephone, electricity, car maintenance, credit card and other loans. Keep a diary for a month for all your discretionary spending - including coffees, lunches, and other odd bits and ends. You can also talk with your existing lenders and come to some agreement on reducing you interest rates on your debts and the repayments. But remember any reduction in repayments may increase your repayment period and the total interest you have to pay in the long term. If you need help setting up your budget here are some links to resources you can download to help you get started: Once you set up your budget you want your total income to be more than your total expenses. If it isn't you will be getting further and further behind each month. Some things you can do are to increase your income - get a job/second job, sell some unwanted items, or start a small home business. Some things you can do to reduce your expenses - make coffees and lunches at home before going out and buying these, pay off higher interest debts first, consolidate all your debts into a lower interest rate loan, reduce discretionary spending to an absolute minimum, cancel all unnecessary services, etc. Debt Consolidation In regards to a Debt Consolidation for your existing personal loans and credit cards into a single lower interest rate loan can be a good idea, but there are some pitfalls you should consider. Manly, if you are taking out a loan with a lower interest rate but a longer term to pay it off, you may end up paying less in monthly repayments but will end up paying more interest in the long run. If you do take this course of action try to keep your term to no longer than your current debt's terms, and try to keep your repayments as high as possible to pay the debt off as soon as possible and reduce any interest you have to pay. Again be wary of the fine print and read the PDS of any products you are thinking of getting. Refer to ASIC - Money Smart website for more valuable information you should consider before taking out any debt consolidation. Assistance improving your skills and getting a higher paid job If you are finding it hard to get a job, especially one that pays a bit more, look into your options of doing a course and improving your skills. There is plenty of assistance available for those wanting to improve their skills in order to improve their chances of getting a better job. Check out Centrelink's website for more information on Payments for students and trainees. Other Action You Can Take If you are finding that the repayments are really getting out of hand and no one will help you with any debt consolidation or reducing your interest rates on your debts, as a last resort you can apply for a Part 9 debt agreement. But be very careful as this is an alternative to bankruptcy, and like bankruptcy a debt agreement will appear on your credit file for seven years and your name will be listed on the National Personal Insolvency Index forever. Further Assistance and Help If you have trouble reading any PDS, or want further information or help regarding any issues I have raised or any other part of your financial situation you can contact Centrelink's Financial Information Service. They provide a free and confidential service that provides education and information on financial and lifestyle issues to all Australians. Learn how to manage your money so you can get out of your debt and can lead a much more comfortable and less stressful life into the future.