Biweekly mortgages have been touted by many companies as being an excellent way to save money and pay off your mortgage earlier. Some companies even claim that "it won't cost you any more than you're paying now." What a crock! What do you think a true biweekly mortgage saves you? I'm talking about the savings from paying more frequently. Well, it doesn't save that much at all. Hold on to your calculators, we're going to use our brains and look at this problem very carefully. Here is something these biweekly mortgage salespeople don't want you to do.

A $100,000 mortgage at 8% for 30 years has a monthly payment of $733.76. That's 360 payments of $733.76 or a total of $264,155 at the end of 30 years. A true biweekly mortgage with 780 payments (26 payments per year) has a payment of $338.52, which totals $264,041 after 30 years of payments. Check out how much you saved by paying biweekly-that's right, only 114 bucks ($264,155-$264,041)!

So, if paying more frequently isn't what creates the savings, how can these companies claim to save you big money? They use the "biweekly" word to imply that increased frequency of payment can save money when the real way they show the savings is by making you increase your payments.

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They do a little math trick to force you to pay more, and that trick is to divide your mortgage in half and make that result the biweekly payment. The problem here is that 26 half-payments equal 13 whole-payments or an extra month's payment each year. Obviously, if you pay more money, you reduce your mortgage faster.

Let's go back to my original example. Notice that half the monthly payment of $733.76 is $366.88. If you pay $366.88 every two weeks, it only takes around 23 years to repay the $100,000 and costs a total of $217,853. So it seems like you save money by paying more frequently, but in reality it's the extra money that reduces the mortgage faster.

This is a forced-discipline mortgage repayment plan. Not only requiring you to increase your payment, but how frequently you make those payments. Under the biweekly mortgage plan you make 26 payments per year instead of 12. Now you're writing 14 more checks each year. Isn't that fun, yeah, just what you always wanted, 14 more bills to pay each year! And to gain what? Nothing you can't do yourself.

But the stupidity of this scheme doesn't end here. Most biweekly mortgage companies actually want to charge you for this entire setup! That's right, most companies charge an up-front fee and a monthly service fee.

The monthly service fee is so they can debit your checking account every two weeks and you don't have to write the checks. That sounds to me to be an advantage for them! They get your money guaranteed since they can take it from your account at will. I think you should charge them a fee for that privilege!

Recently, a company attempted to sell my uncle on refinancing his current mortgage into one of these biweekly farces. Get this, their interest rate was higher than his current mortgage! But, the saleswomen argued, "interest rates don't matter…look at how much you save."

"Interest rates don't matter!" How can she get away with that direct lie?

Let's look at the numbers. Refer again to my first example of $100,000 for 30 years at 8% with a monthly payment of $733.76 that costs a total of $264,155 to repay. She said something like, "even though the biweekly payment is $366.88 (half the monthly payment) you can afford to add a little more…how about another $50? That raises your biweekly payment to $416.88."

Her company's rate is 9% and with payments of $416.88 ($366.88+$50) the total cost to repay the $100,000 is $214,026. The savings look like $50,128 (the difference between $264,155 and $214,026). Then there's the $500 up-front fee and the $3 per-payment fee that they don't include in the total cost of the loan.

So how much would this truly cost my uncle if he signed up for this rip-off plan? When you include all the fees of the biweekly plan it comes to $216,068. He always has the option to pay $903.24 monthly toward his current mortgage. That $903.24 monthly payment is the equivalent of paying $416.88 biweekly. At $903.24 he can pay his current mortgage off for a total cost of $182,093. And that's with no special plan, fees, extra payments or, in other words, no smoke and mirrors.

Look at that figure ($182,093). They tried to sucker him into a complex financial scheme that would cost $216,068! That rip-off plan would have him pay nearly an extra $34,000 compared to doing it on his own!

There are also considerations, such as other debts. If you have credit-card debts with interest rates greater than your mortgage rate, it makes sense to pay back the credit cards first. Similarly, if you have investments earning more than the interest rate of your mortgage, it's best to continue investing. Also, because of inflation, your future payments toward your mortgage are less when compared to current dollars. For example, my parents' mortgage was $198 when they purchased their home in 1969. This amount was a lot for that time but doesn't seem like much now. The good news is that your $800 mortgage payment will seem like peanuts in 30 years.

Let's look at the pros and cons of the biweekly mortgage through third-party companies. Cons: (1) probably costs far more than doing it yourself, (2) more CON-fusion, (3) forces you to pay earlier, (4) less flexibility in mortgage payments. Pros: (1) Gee, I can't think of any…I guess if you want to be forced to pay off your mortgage early, and enjoy giving someone a fee to force you to, then it's good.

My opinion is that if you want to pay your mortgage off early and save money on interest, then add some extra money to your monthly payment. This way, if for some reason you have trouble making the new payment, you always have the option to make the old lower payment, plus you retain more control over your money.

Or if you really want to be forced to pay your mortgage off early then ask you current bank if they can set up a direct payment plan that includes your extra principal payment. As long as they can do this for free then give it a try.

Some of you might be thinking, "What kind of threat can I deliver to my credit-card bank to make them lower my rate? What deal-breaker do I have?" Realize that there are options, and start taking advantage of them. The first place to look is in your mailbox.

You know those low-rate transfer credit-card offers that go from your mailbox straight to the "circular file"? Banks attempting to get you to switch sent out more than 3 billion transfer offers last year, so I know you've seen them. Take a closer look at the next one that arrives—probably today. The best part about that offer is that you need not apply for the new credit line in order to make good use of it.

What that offer becomes to you is the deal-breaker—the leverage you might need to persuade your current bank to lower its APR on your account. How?

Take out your credit card, flip it over, and call the customer-service number on the back. After you're done going through the torture of entering your credit card-number and information in the automated voice menu, choose the option that gets you to a human. Remember to be calm yet firm. Your conversation could go something like this:

Account rep: "How can I help you today?"

You: "I've been looking closely at my credit-card statement, and I've noticed that your bank has been charging me like 18% interest for a while now. I don't believe I should be paying that much interest."

Account rep: "What would you like me to do?"

You: "Lower my APR to something more reasonable, like 6.9%."

That might be all it takes to make them lower your rate, but I want to prepare you for a bigger battle.

Account rep: "I can't do that?"

You: "Who can?"

Account rep: "Nobody really, we can't just change rates like that."

You: "Can I speak to your supervisor, please?"

Account rep: "Sure, please hold."

Supervisor: "Can I help you?"

You: "Your bank is charging me way too much interest, and I want it lowered to something like 6.9%. This is the deal: I'm holding a credit offer in my hand from [name the bank]. And they're willing to give me 4.9% for 6 months, no annual fee [read the offer terms]. I bet your bank has better offers for new, unproven customers than they do for established profitable ones, don't they? I see no reason to stay with [name] if they're not willing to treat me better. I have plenty of other banks to choose from."

Supervisor: "You know that if you take that offer, the rate will go up in six months."

You: "Well, I'll worry about that six months from now. And that's six months without any high interest charges from your bank. Or six months that your bank doesn't make any money from my account."

Supervisor: "What can I do for you?"

You: "Look, I'm not asking for you to lower my rate to 4.9%, but I do need a reason to keep my balance with your bank. How about 6.9% or 7.9%?"

Now, at this point your chances are 50/50 as to whether they are going to lower your rate. Your bank, may come back with an offer like 7.9% for six months or a low-annual-fee card at a lower rate. In general, you should always take the lower rate, even if there's a time limit. You can always call back in six months and do this again.

Remember that you need a real credit offer to do this. Without a deal-breaker you're just begging, and you won't win by begging. Success here may also depend on how good you've been at handling your account—paying on time. But no matter what your credit history is, you should make that call, because you may be surprised to find that the bank really wants to keep you as a customer.

It cost banks plenty of money to find a new customer. The competition for a piece of your credit business is intense. Banks are fighting to get you to switch, so it is truly in their best interest to keep you, a proven and profitable customer.

How much can you save? Here's some incentive to make that call today. Let's say your current rate is 18%. If you can get your bank to drop its rate to something even as high as 9.9%, you'll save a bundle! The dollar amount saved depends on two other factors: (1) how much you owe and (2) how much you're paying per month.

For example, if you owe $5,000 and you're making payments of $100, at 18% it's going to take 93 months to pay off the card, and it's going to cost $9,300. However, at the new rate of 9.9% it takes only 65 months to pay off the card, for a total cost of $6,500. You save the difference between $9,300 and $6,500, which is $2,800!

That's $2,800 for making a phone call—do it now!