Why Your Monthly Debt Payment Matters So Much - Quicken Loans Zing Blog

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That nagging, monthly debt payment may feel like it will never go away. Whether it’s student loan debt or a large credit card balance that seems like it never shrinks, your monthly payment toward your debt matters a lot. This one bill can be one of the most important factors impacting your financial health. The stress of being in debt is one thing, but your monthly debt payment could also affect your credit score and how long you’re stuck digging yourself out of debt.

Keep these important elements of your monthly debt payment in mind. They could mean the difference between a debt-free life with a solid credit history and piles of debt with a not-so-good credit score:

Payment Amount

Aside from fees and interest rates, there’s one other major factor that affects your debt balance: your payment amount. Seems like some obvious math, but the amount you pay toward your debt each month impacts the total you pay over the lifetime of the debt. And paying just the minimum amount on your debt each month means you’re stuck paying your bills for a long, long time.

Take a moment to plug in your outstanding debt into a debt repayment calculator. You can use these tools to see 1) how much interest you’ll accrue at certain payment amounts, and 2) how much time it will take to pay off your balance by just paying the minimum. You may be shocked to see that you could be throwing hundreds of dollars away toward accruing interest by only paying the minimum amount. The longer it takes for you to pay down your balance, the more interest you’ll accrue and the more money you’ll have to pay back, so paying more than the minimum each month (even a few dollars) is the key to dumping your debt faster.

Frequency of Payment

Most of your monthly debt payments are just that: once-a-month. Even though there is a set due date and minimum amount that you owe your creditor every month, there’s one simple strategy that could help you pay down your debt faster: pay your bill twice a month instead. Let’s say the minimum monthly payment on your student loans is $500. That’s a lot of money to pay all at once. But by breaking it into two payments, you not only pay a smaller amount at once ($250), but you could even increase your payments a little (like to $275) without feeling like you’re paying a lot more toward your debt. This little mental trick makes it feel like you’re paying less money each time toward your debt, while still paying more than the minimum. (Just be aware of any prepayment penalties on your credit cards or loans).


The majority of your credit score (about thirty-five percent) is influenced by your payment history, so things like paying your bills on time has a huge impact on your score. If you’re always on-time when settling your bills, then your payment history is probably in good shape. If you frequently make late payments, your credit score could be suffering. That’s why it’s so important to always pay your bills on time (and be sure to pay at least the minimum amount when you do).

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