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Reduce Credit Card Debt: Pay Bi-weekly

October 18, 2018 - Resources

The sooner you make a payment to a credit card company, the less interest you'll pay. And you'll save more in interest charges by making a payment days or weeks early.

Federal law requires credit card companies to process payments the day they arrive. If you only can afford to pay the minimum each month, there's still a way to accelerate your payoff. Stop charging on the card—and make payments every other week rather than every month. Never decrease the payment amount until you pay off the card.

For example, take a credit card with a $5,000 balance, a minimum monthly payment of $100, and an annual interest rate of 14%. By paying $100 each month, you would pay the card off in six years and four months, with a total interest cost of around $2,547.

By sending $50 payments biweekly, you would pay off the card almost 10 months earlier—and save $339 in interest. If you're managing to pay the minimum payment, consider the biweekly pay-down method. You need to be organized and financially disciplined for it to work.

Copyright Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.