Yes. Whether your debt is on a credit card or a home mortgage, the same principle applies: you'll save money on interest by paying more than the required (minimum) monthly payment. By paying more than the minimum payment, the excess of your payment above the interest charge is more than likely applied toward the outstanding balance (principal). However, just to be sure, it is always a good idea to specify to a mortgage company that any excess payment be put toward paying down the principal. By accelerating the repayment of principal, future interest charges are reduced because interest will be charged on a smaller balance than would be the case if only minimum payments are made. Debt repayment time will also be reduced. Depending on your debt balance, you could save hundreds, even thousands, of dollars and years, even decades, of debt repayment time. Here's a simple illustration using credit card debt. Suppose you have a $5,000 credit card balance. With minimum payments of 3% of the outstanding balance, you'd pay $4,567 in interest ($9,567 total), and it would take 16 years. Increase the monthly payment to 6% of the balance, and you'd pay $1,592 in interest over seven years, a savings of $2,975 and nine years of payments. We would like your feedback on this Personal Finance Frequently Asked Question.

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