What are the pros and cons of making bi-monthly payments instead of monthly payments?

Making bimonthly payments, also known as semimonthly payments, on loans or mortgages has both advantages and disadvantages. Here are the pros and cons to consider when deciding between monthly and bimonthly payments:

Pros of BiMonthly Payments:

1. Faster Debt Repayment: Bimonthly payments can help you pay off your loan or mortgage faster. Since you're making half of your monthly payment every two weeks, you end up making an extra payment each year. This additional payment reduces the principal balance, which can lead to faster loan payoff.

2. Interest Savings: By reducing the outstanding principal balance more frequently, you can save on interest over the life of the loan. This is particularly beneficial for longterm loans like mortgages.

3. Improved Budgeting: Bimonthly payments can align better with your biweekly or semimonthly pay schedule, making it easier to budget for your loan payments. It can also help you avoid the "payment shock" of larger monthly payments.

Cons of BiMonthly Payments:

1. Administrative Hassle: Setting up bimonthly payments may require additional administrative work, such as coordinating with your lender to ensure they accept this payment schedule. Some lenders may not offer this option.

2. Potential for Confusion: Bimonthly payments can be confusing for some borrowers. You need to make sure you're paying the correct amount every two weeks to avoid late fees or missed payments.

3. Not All Loans Support It: Not all loans or lenders support bimonthly payments. Before switching to this schedule, check with your lender to see if it's allowed and if there are any additional fees or requirements.

4. Less Flexibility: Bimonthly payments may offer less flexibility than monthly payments. If your financial situation changes, you may find it challenging to adjust your payment schedule.

5. Minor Impact on ShortTerm Loans: The impact of bimonthly payments on shortterm loans, such as car loans, may not be as significant as on longterm loans like mortgages. In some cases, the difference in interest savings may not justify the extra effort.

Ultimately, the decision to make bimonthly payments should align with your financial goals, your ability to manage this payment schedule, and whether your lender supports it. While bimonthly payments can accelerate debt repayment and save on interest in the long run, they may not be suitable for everyone. It's essential to weigh the pros and cons and consider your personal financial situation before making a decision.