When paying of credit cards, is it better to make smaller payments more frequently (say weekly) or to make one large payment monthly?
Will the smaller more frequent payments really reduce the amount of interest I pay?
Thanks
2007-01-18 06:41:11 · 17 answers · asked by Beth C 1 in Business & Finance ➔ Credit
Typically credit cards only allow a payment every 14 business days. If you do not use the credit card, then paying frequently will definately help you out, because if you owe $1000.00 and you pay $100 every two weeks, then your interest is going down each time you pay rather than every 30 days or so. Your smaller payments would need to equal a little more than your big payment each month in order for you to really see a difference.
2007-01-18 06:50:39 · answer #1 · answered by designerista 4 · 0⤊ 0⤋
As soon as you make a payment that is enough to pay not only the interest due, but some of the principal, your interest accrual will be reduced... so, yes, if you make payments more often, it will reduce the interest - BUT the first payment of that billing period has to be enough to pay the interest due for that bill, or you are not doing anything worthwhile.
So, if your bill says that interest accrued for the period is $75, and your minimum payment is $50, and you only pay $50, you are not paying enough to do anything.
You would have to pay the $75 (or more). Then, any other payments you send in later that month, in the same billing period would go towards paying down your principal.
2007-01-18 06:48:54 · answer #2 · answered by Vivian D 4 · 0⤊ 0⤋
If you're paying finance charges, it's best to do a balance transfer to a new credit card with 0% financing. If you have good credit it's very easy to do this. Don't make small or large payments if you're stuck paying interest.
Just apply for a Citi card or an Amex credit card. Make sure they do not charge a balance transfer and offer 0% APR for up to 12 months. That way you can slowly pay off your credit card bills, paying only principal and no interest.
Learn more at http://www.thetruthaboutcreditcards.com
2007-01-18 07:05:27 · answer #3 · answered by Todd S 3 · 0⤊ 0⤋
I do believe that most credit cards compound interest daily. If that is the case, smaller payments more frequently is more economical than larger payments less frequently. Check with your credit card company first though to figure out how they compound the interest.
2007-01-18 06:45:18 · answer #4 · answered by David 3 · 0⤊ 0⤋
Smaller more frequent payments are better than one lump payment a month - interest is compounded monthly, so if there's a smaller balance over the month, you pay less interest.
2007-01-18 06:43:50 · answer #5 · answered by zippythejessi 7 · 0⤊ 0⤋
The interest is calculated by the balance that you are carrying at the end of the billing cycle.
So paying weekly or monthly really does not have an effect on the interest charges.
2007-01-18 06:44:39 · answer #6 · answered by bzqqsq 3 · 0⤊ 0⤋
Yes, most credit card charge an interest rate on a daily basis, so, if you can reduce it whenever you can, you will save some of the $ you'd have to pay on the interest on that amount.
2007-01-18 06:46:37 · answer #7 · answered by Maria Rose 5 · 0⤊ 0⤋
Your interest will be the same, and you'll pay interest if you have a balance after the payment date. As long as you make the minimum payments youre ok. Go to your bank and speak to one of their associates for futher details.
2007-01-18 06:44:37 · answer #8 · answered by Anonymous · 0⤊ 0⤋
You must ALWAYS pay more than the minimum payment required...If you ask a pro to calculate, it will take most of us over 30 years to clear a credit card.
2007-01-18 06:48:50 · answer #9 · answered by Anonymous · 0⤊ 0⤋
interest is only the time value of money. How long are you usining it and at what rate. any payments over the minimum are better than just the payment required
2007-01-18 06:45:00 · answer #10 · answered by golferwhoworks 7 · 0⤊ 0⤋