Can You Apply Mortgage Accelerator Principle to Credit Card Payments?

Using a mortgage payment trick, you can cut the time it takes to pay off your credit card by months and even years. The mortgage accelerator principle is not unique to real estate, it just relies on the fact that paying a bill as soon as possible is the fastest method to eliminate a debt. Also, this method forces you to pay down a credit card you might otherwise let sit.

Mortgage Acceleration

The mortgage accelerator principle states that you should make a payment on your account every two weeks instead of one payment a month. Some months have more than four weeks so you end up making 13 regular payments instead of 12 each year. Also, interest on mortgages and credit cards accrues daily, so making payments sooner reduces the balance on which the bank can charge interest.

Does It Work on Credit Cards?

The mortgage accelerator principle works with credit card payments because it exploits how credit works in general. The lower your average balance, the less you pay in finance charges. One minor difference is that some mortgages come with the option of bimonthly payments, whereas this may not be an option on your credit card. On the other hand, some mortgages come with prepayment penalties, so the mortgage accelerator principle may work better with credit cards when a card allows it.

Warning

Not all credit card companies accept multiple payments a month. Some banks and credit card companies may charge a fee for extra monthly payments, which negates the entire purpose of this strategy. Alternatively, some banks allow partial payments as long as you send at least one payment equal to the minimum charge. If you fail to make at least one minimum payment, the bank might consider you in default, despite paying more than the minimum due.

Tip

Using the mortgage accelerator principle works best with credit cards when you do not add to your balance. Ideally, you should employ the accelerator principle -- assuming your credit card company and bank allow it -- until your balance reaches zero. If you must spend on credit, put purchases on a separate account if it has a lower interest rate.