# As everyone has already told you Lisa it is because you would be making 2 extra payments a year

What I’ve not seen anyone else mention is the interest savings in itself. Most, unfortunately not all, loans of any sort be it charge card, or a mortgage calculate your interest which is compounded and added to the amount you will pay back is figured on an average daily balance of the principle of the loan (with some it’s weekly or monthly—depends on the lender, read your paperwork).

So when you pay even half of the loan amount early you have essentially knocked down the average daily balance for the entire month. Lower balance, lower amount of interest you have to repay. You can accomplish the same thing by paying extra on your principle monthly too. In other words the shorter the time frame between payments the more interest you’ll save.
Here’s a much smaller amount that will show you how much it will save you. Our current “pet” bill is our little BOA account, we started last month owing on it roughly \$1,500 I paid a total of \$350 on it during the month, that was the minimum of \$120 plus \$230 snowball and “extra” money against it. If I had paid that all on the bill due date I would have been charged approximately \$9.50 in interest on that based on the 4.9% interest rate because it would let the average daily balance be higher than how I actually paid it.
I pay a minimum of every two weeks on that bill \$145 snowball money on the first pay period and \$120 on the second. The remaining was paid in small increments as I had “found” money come in. Any time found money comes in I pay it IMMEDIATELY on the “pet” bill. The end result was I saved an additional \$1.73 on interest on that \$1,500 bill for the month. I know that \$1.73 doesn’t sound like much, but remember we are talking a \$1,500 debt not a \$150,000 mortgage. Had it been a 4.9% mortgage and I’d paid similarly the savings would have been much more.

That is for just the first set of 4 weeks worth of payments. Then you add in that \$1.73 won’t be added to future balances to be compounded and the savings grows. You then add in the extra two payments per year and the savings grows even more.

In a snowball scheme of things this also effects how much you will pay out on bills that are in line behind the current “pet” because you will get to paying your snowball amount on each additional one faster. The next bill in my line is Best Buy (Who I hate with a passion) and they are at 8.99% and currently has an approximate \$5,000 balance. So those savings will really add up there.
My grandmother always said “Mind your pennies and your dollars will mind themselves.” (which is by the way the name of my frugal blog). This is a prime example of how minding your pennies will definitely produce dollars in savings.