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Monthly vs Biweekly Payments

Which payment frequency reduces interest?

About this calculator

Paying a loan biweekly means paying half of the monthly payment every two weeks instead of the full payment once a month. Because a year has 52 weeks, that adds up to 26 half payments, the same as 13 monthly payments instead of 12. The extra payment each year goes straight to principal, so the loan is paid off years early and costs much less interest. This calculator compares the two schedules side by side, subtracts any fees a biweekly program charges, and shows whether switching is worth it.

How to use this calculator

Enter the Loan Amount, the Interest Rate and the Loan Term in years. The monthly payment and the matching biweekly payment are shown under the term. If your servicer or a third-party company charges for a biweekly plan, open Advanced assumptions and enter the one-time Setup Fee and the Fee per Payment. Every result updates as you type, and the inputs are saved in the page address so you can bookmark or share a scenario.

The method

The monthly schedule is a standard amortizing loan, with one fixed payment a month that repays the balance over the term. The biweekly schedule pays half that monthly payment every two weeks, 26 times a year, with interest charged each period at the annual rate divided by 26. The balance is followed payment by payment until it reaches zero, and the payments are grouped into calendar months to compare payoff times. Interest saved is the monthly plan's total interest minus the biweekly plan's. Fees are the setup fee plus the per-payment fee times the number of biweekly payments, and net savings are the interest saved minus the fees. For comparison, the table also shows a third plan: the normal monthly payment plus one twelfth of it extra each month, which adds the same 13th payment a year without changing how often you pay.

Worked example using the default values

A $350,000 loan at 6.25% over 30 years has a monthly payment of $2,155 and costs $425,804 in interest over the full 30 years. Paying $1,078 every two weeks instead pays the loan off in 24 years and 5 months, 5 years and 7 months sooner, after 633 payments, and costs $331,204 in interest. Biweekly payments save $94,600. Paying $2,335 a month, the monthly payment plus one twelfth, also pays the loan off in 24 years and 5 months and costs $332,157 in interest, nearly the same. If a biweekly program charged a $300 setup fee and $2.50 per payment, the fees would come to $1,883 and the net savings to $92,717.

Interpreting the results

The headline is the interest saved after fees over the life of the loan. Most of the saving comes from paying the loan off years early, so it only fully arrives if you keep the loan to the end; if you expect to sell or refinance within a few years, the saving by then is much smaller, although the extra principal you paid down still belongs to you as equity. The chart shows how much faster the biweekly balance falls. The comparison table shows that the timing of payments matters very little: it is the extra 13th payment that does the work.

Practical tips

Ask your servicer whether it accepts biweekly payments and applies each half payment as soon as it arrives; some hold half payments until the full monthly amount is received, which removes the small timing benefit. Avoid paying a third party to run a biweekly plan when you can get the same effect for free by adding one twelfth of your payment to each monthly payment as extra principal. Biweekly payments line up well with a biweekly paycheck, which is their main practical advantage. Make sure extra payments are marked as principal so the servicer does not treat them as an early payment of next month's bill.

Limitations

The calculator covers principal and interest only, not taxes, insurance or mortgage insurance, and it assumes the rate stays fixed for the whole term. It assumes each biweekly payment is applied as soon as it is made and that the lender charges interest per two-week period; servicers that calculate interest monthly give a slightly different result. Savings are not discounted for the time value of money, and the calculator does not weigh other uses for the extra money, such as paying off higher-interest debt or investing.

Frequently Asked Questions

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