Your student loan interest grows every single day. Believe it or not, almost everyone you meet will have a story to tell about student loans, be it from their own experience or one they heard from family or friends. Understanding how student loan interest works and how it can be detrimental if you aren’t careful are reasons why it’s so crucial that if you can, you do your best to pay more the minimum on your student loan bill every month.
In my IG Story Highlights, I’ve shown you have to calculate how much interest is added to your student loans daily. Today I’m sharing with you another tip that will help you reduce the amount of interest you owe.
Watch: How to Calculate Your Daily Student Loan Interest
The Money Saving Tip
When making your student loan payment, instead of making the payment in full, break the amount up into two.
For example, let’s say your minimum payment is $100.
Instead of paying your payment in full on the due date, pay half of the payment two weeks before the payment is due then pay the other half on the day the payment is due.
Because each day interest accrues on the daily balance, every time you make a payment to reduce the amount that you owe, the amount of interest added is, in turn, lowered also.
As you continue breaking up your payments each month, you’ll start to notice that more money from your payment’s applied to your principal rather than going to the interest. Not only does this reduce the amount of you, but it also speeds up the amount of time that it will take to pay off your loan in full. Don’t be alarmed if you don’t see big changes immediately, depending on how much you owe and how much you’re paying beyond the minimum payment, there may be a small amount of time before you really start to see the big changes as a result of this method. However, any amount that is lower than the full amount is better than nothing.
Remember, before you must satisfy all the interest due before you will see any of your payment be applied to your principal balance.
For more information on how your payments are allocated contact your student loan service provider. Be sure to ask detailed questions to get a complete break down of how much of your payment will be applied to the student loan interest and how much will be applied to the principal.
Read: Understanding Paid Ahead Status on your Student Loan
To discuss the best repayment options for your student loans sign up for a financial coaching discovery call!
