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Author: aja91 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 310319  
Subject: Re: 2 payments per month? Date: 6/14/2001 11:04 AM
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Have you guys ever heard of making two payments per month based on 
the belief that you will pay less interest and pay off your card 
earlier? Is it true? I need a better math brain than the one I have!

Depends upon how and when the card company charges interest and applies 
the payment.  If you are making half a minimum payment per month, it 
won't work because you'll likely get hit with fees for underpaying.

To make it simple, let's say your balance is $100 and the interest 
charge is 1% per month.  Your minimum payment is $2.

Here's how it works if you make minimum payments, once per month:

Month  Balance  Payment  Interest  New Balance
  1    $100.00    $2.00     $1.00       $99.00
  2    $ 99.00    $2.00     $0.99       $97.99
  3    $ 97.99    $2.00     $0.98       $96.97

If your company charges you interest on the average balance each month, 
and you sent in $1 twice per month, it would look like this:

Month  *Balance  **Payment  Interest  New Balance
  1     $ 99.00      $2.00     $0.99       $98.99
  2     $ 97.99      $2.00     $0.98       $96.97
  3     $ 95.97      $2.00     $0.96       $94.93

*Average balance you calculate the interest on
**If balance due end of month, send in $1 on 1st, $1 on 15th.

So you would save money doing this.  Check the fine print to see how 
your company calculates interest.
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