Biweekly payments vs one extra monthly payment a year
Biweekly payments and one extra monthly payment a year usually save a similar amount, because both add the equivalent of one extra monthly payment to principal each year. A true biweekly plan tends to save a bit more, since each half-payment reduces the balance a little sooner. The bigger difference is often practical: which approach fits your pay schedule, and whether your servicer charges anything for it.
This guide compares the two side by side, shows the gap in a worked example, and explains other ways to send extra money to principal.
Why the two approaches are so close
On a biweekly plan you pay half of your monthly payment every 14 days. That is 26 half-payments, or 13 full payments, each year. With the extra-payment approach you keep paying monthly, and once a year you send one additional full monthly payment marked for principal. Either way, you pay 13 monthly payments a year instead of 12.
Because the extra amount per year is the same, most of the savings are the same too. The extra principal reduces your balance, which reduces every future interest charge, which in turn shortens the loan.
Where they differ
Timing. With a true biweekly plan, part of the extra money arrives every two weeks throughout the year and starts reducing interest right away. With one extra payment a year, the extra money arrives all at once at the end of each year. Until then, your balance is a little higher, so a little more interest is charged.
Cash flow. A biweekly plan spreads the extra cost evenly across the year. A single extra payment means finding a full monthly payment in one go. Some people time it with a work bonus or a tax refund. Others prefer smaller, regular amounts.
Setup and cost. One extra payment a year usually needs no special setup. You can make it whenever you choose, as long as your servicer applies it to principal. A biweekly arrangement may depend on whether your servicer accepts half-payments, and some third-party biweekly services charge fees that can eat into the savings.
Flexibility. An annual extra payment is easy to skip in a tight year. A biweekly plan, once automated, is easy to forget about, which some people see as a benefit and others as a risk if money gets tight.
Worked example: the same loan, two ways
For example, take a hypothetical $300,000, 30-year fixed-rate mortgage at 6.5% with a monthly payment of $1,896.20. Paid monthly for the full term, total interest would be $382,636.71. Using the same math as our calculator:
| True biweekly ($948.10 every two weeks) | One extra monthly payment a year | |
|---|---|---|
| Total interest | $294,513.45 | $298,650.70 |
| Interest saved vs monthly | $88,123.26 | $83,986.01 |
| Time saved vs monthly | 70 months | 68 months |
Both approaches save a large amount compared with paying monthly. In this example the true biweekly plan saves $4,137.25 more than one extra payment a year, because its extra money reaches the balance sooner. That gap is real, but it is small next to the savings both methods produce, and a fee for a biweekly program could easily outweigh it.
A third option: a little extra every month
Another common approach is to divide one monthly payment by 12 and add that amount to every monthly payment. This sends the same yearly extra to principal as the other two methods, but spreads it across each month. It usually lands between the two in total savings, because the extra money arrives sooner than an annual lump sum but a little later than true biweekly half-payments.
Our mortgage calculator compares monthly payments with true biweekly payments and with the one-extra-payment-a-year approach. For the month-by-month version, you can ask your servicer for an amortization schedule that includes an extra principal amount.
How to choose
If you are paid every two weeks and your servicer applies half-payments when they arrive, a biweekly plan may be the simplest way to make the extra payment automatic. If your servicer does not accept partial payments, or a biweekly program would add a fee, one extra payment a year or a small monthly extra can get you close to the same result without that cost.
Whichever you choose, the most important step is the same: make sure the extra money is applied to principal, not held or treated as an early regular payment. See our guide on asking your lender about biweekly payments for how to check.
Common questions
Does it matter what month I make the extra payment?
Earlier is slightly better, because principal paid sooner stops collecting interest sooner. The calculator’s annual option applies the extra with every 12th payment, so making it earlier in the year would save a little more than shown.
Can I do both?
Yes, if your budget allows and your servicer applies the money to principal. Any extra principal reduces interest. Just keep in mind that extra mortgage payments are hard to get back if you need the cash later.
The takeaway
Biweekly payments and one extra monthly payment a year both add about the same amount to principal each year, so their savings are close. True biweekly usually comes out slightly ahead because of timing, while an annual or monthly extra payment can be simpler and avoids any program fee. Pick the method that fits your cash flow, and confirm the extra is applied to principal.
This guide is educational only and is not financial, tax, or legal advice. The example uses hypothetical numbers; your lender or card issuer sets your actual terms. See how our calculators work.
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