Paying off balance more quickly with multiple payments

[Anonymous]

Hey credit buddies,

I'm climbing my way out of cc debt (thanks younger self!) and have been steadily making progress over the past year, sticking to a budget and getting motivated by declining balances. Now that I've established a good habit of paying my cc bills as soon as I get paid, snowballing smaller balances and working towards eliminating bigger balances (paid off two Comenity store cards [William Sonoma $0/750 and LOFT $0/750], an Amazon Chase card [$0/2000], and a Discover card [$0/1900] already), I am started to make progress on my two biggest balances - a NFCU Go Rewards card (balance $5351/$5500) and a Capital One QS ($4261/$5000). I get paid every other Friday and have about $400 a month that goes to paying down cc debt above making the minimum payments (NFCU min is ~$115 and Cap One is ~$140). I'm trying to pay off the Cap One balance first since it has the higher interest rate.

Here's my scenario:

Taking July for example, I get paid on the 6th and the 20th. The NFCU is due on the 14th and the Cap One is due on the 28th. When my direct deposit hits on the 6th, I pay the NFCU minimum that day and use the "extra" money in my budget (~$200 a paycheck) to make a payment to Cap One. When my paycheck deposits on the 20th, I pay the minimum plus any extra (again, ~$200 above the minimum) towards the Cap One. I'll continue this until the Cap One is at a zero balance, then double down on the NFCU.

My question is, would it be helpful to split my NFCU payment in two, paying half on the 6th and the other half on the 13th to decrease my average daily balance? Or is it better to just make one payment as soon as I can?

Thanks in advance for your help!

[digitek]

Your plan looks good, just pay as soon as you can. I don't think either way will make much difference (if any) and when you pay as soon as you can it means you can't use it for something else 😁

[Anonymous]

Making 2 payments a month will reduce the interest you pay, by at least a little, so if that's your intent, make the 2 payments.

Based on the pay dates you mention, you're paid biweekly, right?  You'll get 3 paychecks in August, so you can take advantage of this to knock down some more of your debt.

[xaximus]

I would suggest putting all of your extra money to the Cap1 to pay it off quicker, since it's a higher interest rate. I know that it's a different method then yours but the reason simply is - the quicker you can pay down the Cap1, the more you can save on interest (even though it may not be much, it's still something).  As long as you can make the minimum + $10 on the other card, target the Cap1 and pay that down as quick as possible. It's up to you, I personally like the snowball effect cause I'll be seeing the balance come down much quicker.

Just my 2 cents. 

[Anonymous]

Yes! I just switched jobs from being paid twice a month (15th/last day of the month) to bi weekly and I'm looking forward to that extra check in August! It's going to make a big dent in my Cap One balance.

[Anonymous]

Hey xaximus - I guess my post wasn't as clear as I had hoped. I am only making the minimum payment on the NFCU and paying the minimum plus whatever extra I can towards the Cap One card, as you suggested. I can't wait to no longer be paying almost 25% APR on this lingering debt!

[xaximus]

@ MIhemingway  - I may have misread it myself. Apologies! If that's what you're doing already, then you're on the right track. One thing I would do though is to pay a little extra then the minimum on the NFCU card, just so that it looks good, even if it's an insignificant amount, like $5-10ish. Just something that's more then minimum due. I have noticed that banks look at minimum due payments as a flag or a "be weary of". Anything more is a good sign. 

[Anonymous]

Thanks for the heads up! I can swing an extra $10/payment on the NFCU without an issue. I'm looking to apply for a mortgage in the next year from them so I want them to look as kindly on me as possible!

[Anonymous]

Congratulations on tackling the problem of debt. Good work! 

[Kforce]

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@Anonymous wrote:

Congratulations on tackling the problem of debt. Good work! 

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+ 1, Congratulations.  

Paying multiple times will save maybe a dime or two each month in interest. (Not worth worrying about)

Many people that get payed more than once a month like to pay a little each payday, or pay one early and another later.  Pay them however it works best for your budget. Keep up the excellent work!