How Extra Payments Work
When you make extra payments on a loan, the entire extra amount goes directly toward reducing your principal balance. This means you pay less interest over the life of the loan because interest is calculated on a smaller balance each month.
Strategies to Pay Off Debt Faster
- Round up payments – If your payment is $467, round up to $500
- Biweekly payments – Pay half your monthly payment every two weeks (equals 13 full payments per year)
- Snowball method – Pay off smallest balances first for psychological wins
- Avalanche method – Pay off highest interest rate first to save the most money
- Windfalls – Apply tax refunds, bonuses, and gifts to your loan balance
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How to Pay Off Debt
Step-by-step guide to becoming debt-free using proven strategies.