Have you heard about our newest feature release? We now offer Biweekly Payments, enabling you to split your loan payments in half and pay them automatically every other week rather than once per month. Why would you want to do this? Because it can save you thousands of dollars on interest and take years off the life of your loan. So how does this work exactly?
One Extra Payment Per Year
For starters, if you’re splitting your monthly payment in half and paying that amount every other week, you’re making a total of 26 payments biweekly (or 13 full payments) each year – as opposed to 12 full payments each year. That’s one extra payment per year! This can have a huge impact on your total debt payoff. All you have to do is set up biweekly payments through ReadyForZero and let these recurring payments withdraw automatically.
Savings Due to Lower Average Daily Balance
This is not as relevant if you’re paying off a fixed-rate mortgage or student loan. But if you’re utilizing biweekly payments to pay off credit card debt or any loan that charges interest on your average daily balance, then you’ll save even more money. Since you’re effectively lowering your average daily balance by making these payments early, then the interest charged will be on a smaller amount – allowing you to pay less.
How You Can Set This Up
1.) Activate Biweekly Payments on ReadyForZero
All you have to do is login, go to the payments tab, and click on “Make a Payment”. You’ll see an option to sign up for biweekly payments there so just follow the steps and you’ll be set up!
2.) When Do You Get Paid
How often do you get paid and what days do these payments get deposited? You’ll want to make sure you know exactly when you’ll have enough money in your account to cover each biweekly payment when it’s withdrawn. It can take up to 5 days to process a payment so make sure your first biweekly payment is scheduled at least 5 days before your due date.
3.) Find Out When Your Due Date Is
Before you make the final decision on when your biweekly payments should be sent, make sure that you’ll have the second payment paid before or on the due date for that bill. All your biweekly payments must arrive before the due date. For example, let’s say you have a bill due on February 5. Your first payment would need to be withdrawn by January 22 so the second one will be withdrawn on February 5 – thus ensuring the whole bill to be paid on time.
4.) Turn Off Autopay (OPTIONAL STEP)
If your lender has setup automatic payments, you need to make sure you have this turned off. Once everything is setup, you can turn off automatic payments for the month that your first biweekly payments are scheduled for. Now just sit back and save.