Schedule an Additional Student Loan Repayment on the Day the Interest Is Lowest
Understanding the interest cycle of your loan is one of the keys to getting rid of student loan debt. And one or two additional payments every moment can help you significantly lower your balance – provided you choose the right moment.
Since student loan interest is usually charged on a daily basis, your balance increases over the course of a month. But if you make an additional payment right after the last month’s balance is paid off, more of your money will go towards paying the main balance than just your interest. Why? Because I have not had time to accumulate yet.
This will lower your overall balance and lower interest payments. When is the best time to do this? Well, the day after the last payment was due.
It is quite obvious that most people cannot do this all the time, especially if you are struggling to make your minimum payment per se. However, if you are receiving a lump sum payment, such as a tax refund, have the opportunity to accumulate an additional payment for several months, or have recently received a raise, you can make real progress on paying the main balance.
Check with your lender to see if additional payments are being applied correctly. Then, if you have the funds, schedule an additional automatic payment the day after your bill is paid each month, even if it’s just a few extra dollars. You can use this calculator to find out how much an additional payment, even as little as $ 20 or $ 50, can help lower the total interest you will pay.
One key point to check is that you’re not just promoting next month’s payment. “Before you click the Pay Now button on the additional payment, you must set that it should be applied to your loan right away, and not treated as a payment for the next month that you send earlier,” notes Forbes .
You want additional funds to go to the main balance; that’s the whole point. You should be able to specify this through your lender’s online payment portal (for example, on Nelnet you should select “Do not promote due date ”), but if not, call your lender and tell him how to apply it (and document the exchange and with whom you spoke).
After making the additional payment, check the following statement to make sure it has been applied correctly. One less concern.