It also makes sense because many of us are paid bi-weekly, so this evens out your cash flow. More importantly, it results in making more payments per year, since there are more than four weeks in most months. That’s because there are two months of the year that you end up making three payments instead of two.
I’m going to use a real whopper of a debt for this example, to show what a difference this strategy can make. Let’s say you owe $20,000 at 24.99% interest. A typical minimum payment would be $800 a month. So instead you send $400 every two weeks. Here’s the math.
If you pay on this debt monthly, you’ll end up paying $8,539 in interest. But if you pay this card down every 2 weeks, you will end up paying just $7,539 in interest. You save a thousand bucks AND get that debt paid off early. Paying bi-weekly may sound like pain, but in this day of online banking it’s a cinch. Just make sure you pay more than the minimum balance with your biweekly payments.
I first saw this idea on CreditCards.com and I will link you to their article on what they call “micropayments” from EasyMoneyShow.com/57.
Learn more about saving on interest charges: www.creditcards.com/credit-card-news/help/micropayments-cut-down-credit-card-debt-6000.php
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