Semi-monthly payments refer to a payment schedule or frequency with installments occurring twice a month. Monthly payments, on the other hand, refer to a payment schedule or frequency that occurs just once a month. Consumers repaying loans or outstanding balances, as well as salaried employees receiving their paychecks, may adhere to a semi-monthly or monthly payment schedule.
What Does Semi-Monthly Mean?
Essentially, semi-monthly means twice a month. When people refer to a semi-monthly pay period or pay schedule, they are usually talking about how frequently they receive a paycheck or how often they make payments on a loan or line of credit. Employees who have semi-monthly pay schedules receive a paycheck twice a month. Consumers who are repaying a personal loan or other type of funding on a semi-monthly schedule will contribute two installments towards repayment each month.
Example of a Semi-Monthly Pay Schedule
Employees who are paid on a semi-monthly pay frequency will usually receive their paychecks on fixed dates each month. While the specific pay date can vary depending on the employer, the 15th and the last business day of the month (usually the 30th or 31st) are common payment dates for employees earning wages through a semi-monthly pay schedule. Employees in this kind of pay structure are usually salaried since the overall salary can be easily divided throughout the year. According to Forbes Advisor, the average salary for employees in the U.S. is $59.428 per year.1
Other Types of Pay Schedules
Other common pay structures include:
- Weekly pay (employees receive a paycheck once a week)
- Bi-weekly pay frequency (employees receive a paycheck every other week)
These types of pay structures are common for hourly employees who are paid not based on a yearly salary but on their hours worked within a particular pay period. According to Forbes Advisor, the average hourly rate for employees in the United States is $28.34.1 Since these types of employees are more likely to work different schedules or hours, it’s usually easier for management to calculate paychecks with a weekly or biweekly payroll.
Pros and Cons of Semi-Monthly Pay Periods
Check out some potential advantages and disadvantages of semi-monthly pay periods below:
PRO: Consistency Is Convenient When It Comes To Paychecks
When you receive your paycheck on the same days every month, you can conveniently schedule your various due payments according to that set schedule. You can even set up automatic payments to go through the day after you receive your paycheck, so you’ll always have enough cash flow to cover your bills and due payments.
CON: Sometimes Can Seem Like a Long Time Between Paychecks
Depending on the day of the week where your pay dates fall, it can be up to two and a half weeks in between each paycheck when on a semi-monthly pay schedule. This might seem like a long time period to go without receiving a paycheck, so make sure you budget your expenses accordingly!
What Does Monthly Payments Mean?
Monthly payments on a loan means consumers pay back their loan with one payment per month. While this kind of payment schedule may result in a slightly longer loan term, it can also help keep loan payments low and affordable.
What Does the Pay Period for a Monthly Installment Loan Look Like?
When consumers take out installment loans or other types of funding, they usually repay their balance on a monthly payment schedule. Take a look at an example repayment schedule for a monthly installment loan of $1,500 below:
| Payment # | Semi-Monthly Payment | Principal Payment | Interest Payment | Remaining Balance |
| 1 | $272.58 | $23.29 | $249.29 | $1476.71 |
| 2 | $272.58 | $27.16 | $245.41 | $1449.55 |
| 3 | $272.58 | $31.67 | $240.9 | $1417.87 |
| 4 | $272.58 | $36.94 | $235.64 | $1380.93 |
| 5 | $272.58 | $43.08 | $229.5 | $1337.86 |
| 6 | $272.58 | $50.24 | $222.34 | $1287.62 |
| 7 | $272.58 | $58.59 | $213.99 | $1229.03 |
| 8 | $272.58 | $68.32 | $204.25 | $1160.71 |
| 9 | $272.58 | $79.68 | $192.9 | $1081.03 |
| 10 | $272.58 | $92.92 | $179.66 | $988.12 |
| 11 | $272.58 | $108.36 | $164.22 | $879.76 |
| 12 | $272.58 | $126.37 | $146.21 | $753.39 |
| 13 | $272.58 | $147.37 | $125.21 | $606.02 |
| 14 | $272.58 | $171.86 | $100.71 | $434.16 |
| 15 | $272.58 | $200.42 | $72.15 | $233.73 |
| 16 | $272.58 | $233.73 | $38.84 | $0.0 |
In the example above, the consumer is making 16 payments on a monthly schedule, which makes the overall repayment term a little under a year and a half.
PRO TIP: If you were this consumer and you wanted to repay your loan earlier, you could opt for semi-monthly payments. By making two payments a month when repaying a loan, you’ll not only pay off your balance earlier, but you’ll also have a high chance of saving money on interest rate charges!
FAQs: Pay Periods and Repayment Schedules
Semi-monthly payroll refers to employees receiving paychecks twice a month, typically on fixed dates like the 15th and the last business day of the month. Bi-weekly payments, however, occur every two weeks, resulting in 26 paychecks a year instead of 24. This difference means that bi-weekly payments can sometimes result in three paychecks in a single month, leading to extra paychecks annually.
For hourly workers, bi-weekly or weekly pay periods are often preferred because their hours can vary significantly. Semi-monthly and monthly pay periods can complicate payroll calculations for hourly wages due to varying numbers of workdays in each pay period.
Receiving smaller checks more frequently can help with budgeting and managing cash flow. For instance, with semi-monthly payroll, the two pay periods per month can make it easier to align paydays with bill due dates, reducing the need to stretch a single monthly paycheck over a longer time period.
Payroll staff must adjust their calculations and processing schedules based on the chosen payment schedule. Semi-monthly payroll requires adjustments for different month lengths, while bi-weekly payments mean payroll staff must handle an extra payroll twice a year due to the 26 pay periods in a year compared to the 24 of semi-monthly.
A monthly loan repayment schedule can help keep payments manageable and predictable. While this can lead to a longer repayment term, it can also mean lower individual payment amounts, which can benefit budgeting.
Yes, switching from monthly to semi-monthly payments can help repay a loan faster and save on interest. By making payments twice a month, borrowers reduce the principal balance more quickly, potentially lowering the overall interest paid over the life of the loan.
With a bi-weekly payment schedule, there are two months each year where employees receive three paychecks instead of the usual two. These extra paychecks can provide a financial cushion for unexpected expenses or allow for extra savings.
For hourly employees, a semi-monthly pay schedule l can be challenging because it may not align well with their varying work hours. This can make it harder for payroll staff to calculate pay accurately and for employees to budget, especially if their hours fluctuate significantly from one pay period to the next.
The payment schedule determines the time period each paycheck covers. For instance, bi-weekly payments cover a 14-day period, while a semi-monthly pay schedule might cover periods from the 1st to the 15th and the 16th to the end of the month. Monthly payments cover an entire calendar month.
Employees should consider their budgeting preferences, cash flow needs, and income consistency. For those with steady salaries, semi-monthly or monthly payments might work well. However, hourly workers with fluctuating hours may benefit more from weekly or bi-weekly payments to better match their income with their hours worked.
CreditNinja’s Thoughts on Semi-Monthly Loans
While CreditNinja offers installment loans that come with monthly payments, we don’t penalize borrowers for making semi-monthly payments. In fact, we encourage borrowers to pay off their loans as early as they like! If you are looking for an affordable loan with flexible repayment options, consider CreditNinja. Check out our online application to see how much cash you could get today!
References:
- Average Salary By State In 2024 | Forbes Advisor
