Biweekly means twice a week or once every other week, though it’s more commonly used to refer to the latter. Biannual is more straightforward, as it’s only used to mean twice a year. In this case, the prefix bi- us is used to mean “occurring twice.” Use the word biennial to describe events occurring once every two years. Although not as commonly semi monthly vs bi weekly used, biweekly may also refer to a magazine or newspaper that publishes once every two weeks. So while most people use it to mean once every two weeks, both definitions are grammatically correct. It’s important to provide context as to which definition you’re using when developing a meeting agenda or other documents for other people.
Going back to our previous example of the $20,000 auto loan with a 60-month term, just making an extra biweekly payment of $200 could reduce your repayment term by almost three years. Credit cards tend to have even higher interest rates to personal loans with the average APR of 21.40% in 2022. If you have higher interest debt, it may make more sense — and cents — to direct your money toward those accounts instead of making biweekly car payments. It’s common among homeowners looking to make an extra mortgage payment to build equity and pay off their loan faster.
Example of Successfully Boosting Revenue Streams with Bi-Weekly Payments
Biweekly pay and semimonthly pay can be confusing because employees generally receive two payments per month. Bimonthly payroll processing can introduce more challenges compared to the biweekly approach. With biweekly, payroll staff take the same steps on the same days every two weeks. You do not designate a set weekday for processing, which makes it more challenging to maintain standard practices. Sometimes payday falls on a weekend or a holiday, which can complicate the process. With a bimonthly payroll, also called a semimonthly payroll, employees are paid twice each month.
One of the main differences between the two is that when making biweekly payments you’ll have 13 car payment periods in a year, instead of the typical 12 monthly payments. When you pay employees semimonthly, you can count on paying the same amount to employees each month. The extra two paychecks for biweekly pay frequencies can set your business back if you don’t properly prepare for months with three paychecks. You will need to make sure you have enough money in your payroll account to cover the additional expenses.
Differences Between Getting Paid Twice in a Month and Getting Paid Every Two Weeks
Prepaying your mortgage doesn’t make sense unless you have a robust emergency fund with at least six months of expenses saved up. If an unexpected bill arises, you don’t want to be caught off guard and have to borrow money to pay it after putting all your extra cash toward your home loan. Bi-monthly payments involve customers committing to making payments every other month. This arrangement can give customers more flexibility than monthly payments, as they spread their financial obligations more evenly throughout the year. Bi-weekly payments refer to a recurring schedule where transactions occur every two weeks, resulting in 26 payments in a year. This frequency often aligns with an employee’s bi-weekly paycheck but has found its way into the e-commerce world due to its potential benefits.
This schedule can be attractive to customers purchasing subscription-based products or services who prefer to pay smaller, more frequent amounts. Every business with employees should have a payroll processing service, and each service charges you to use it. The platform helps employees manage their time and paychecks, too, so everyone benefits. Gusto also has advanced features that make payroll less confusing by helping you manage deductions, pre-tax benefits, tip credits, payroll reports, and more. Gusto works across industries, and it organizes all your employee payroll information, including forms and signatures.
Is Biweekly or Bimonthly Pay the Better Method?
You will then need to find out if your lender will even accept biweekly payments, or if there is a penalty for paying off your loan early. When you start paying back your loan payments, on longer loans (such as mortgages) the majority of your monthly payments will be interest. As your principal is paid down, your interest payments will decrease, as well, and the ratio of your payments will shift toward paying more principal each month. Semi-monthly and bi-weekly pay schedules each have their benefits and drawbacks. When deciding whether to implement bi-weekly vs. bi-monthly payments, focus on their differences in frequency.
Because you’re paying off some of your principal early, you avoid paying interest on that small amount for the next 15 days. Bi-weekly employees, on the other hand, receive payment for 80 hours each payday. To be more specific, full-time salaried employees https://www.bookstime.com/ receive a standard compensation for 2080 hours yearly. If you’re approved for an auto loan refinance, you’ll need to pay off the loan with your existing lender. Then, you can move forward with making payments to your new lender under the new terms.
Semi-monthly employees also receive higher paychecks when compared to by-weekly employees. There are some months under the biweekly pay period where the employees will receive payment thrice instead of twice. Also, within this period, each paycheck will represent 80 hours of work. Before you refinance, it’s important to shop rates to see what terms other lenders are offering. Run the numbers to see how much you can save or even if you can lower your minimum monthly payment.