This is similar to prepaying on a mortgage (making additional payments to be applied to the principal). To make it easier to budget, what you do is take your monthly payment amount and divide it in half. Then you make that half payment on a bi-weekly basis (every other week). In effect, what you are doing is making one additional payment each year. But instead of coming up with the money at one time, you are doing it with a small amount each payment. Like the prepayment plan, the extra amount goes directly against the principal, your mortgage is paid off sooner, and the amount of interest that you end up paying is a lot less.