Summer always puts a big strain on my budget. There are so many extra expenses! I've been looking for a way to get through these months without racking up a huge credit card bill, and one option I'm considering is Skip-a-Pay. What do I need to know about this program?
Summertime brings loads of expenses that can bust any budget. There are family vacations that put a serious strain on your wallet, costly camp fees for the kids and dozens of other expenses that may not always be part of your usual financial planning.
Many people wonder how they'll get through these months. Fortunately, Wasatch Peaks offers an exclusive break from your loan payments during this costly time of year. Now that sounds like a dream vacation!
Skip-a-pay is a program that allows members to skip a monthly loan or credit card payment during an especially tight financial season. Most credit unions offer this program during the holiday season, and again during the summer. Members can choose to skip a payment once a year. There is usually a small fee attached to the payment omission.
Specific criteria must be met to qualify for skip-a-payment. The program is generally only allowed for loans with terms that are 12 months or longer, have been open for at least 9 months and have a good payment history of 6 or more months. Some credit unions allow payment omissions on most loans with the exception of real estate loans. Others only allow the payment break on fixed, closed-end consumer loans like auto and signature loans. Some do not allow it for credit cards and lines of credit. Nearly every credit union requires you to be up to date on your loan payments, and for you to have sufficient funds in your checking account to cover the nominal associated fee.
At our credit union:
- There is a $25 fee per loan payment skipped
- Only one payment may be skipped in July, August or September
- Skips exclude all real estate (including HELOCs) and VISA payments
- Loan must have been opened prior to May 1, 2017 and made at least one payment
- Loan must be current and in good standing
- Interest on the loan will continue to accrue
- Payment will be added to the end of the loan
- Paid-ahead loans are excluded
- Any insurance on the loan will expire on its original expiration date
If you are considering skip-a-payment, speak to a member representative for full details. Additionally, here are some important points to consider before you decide to skip a payment:
1.) Breathing room
The primary benefit of choosing to skip a payment is quite obviously, the extra cash flow. During an expensive time of year, you might not make it through the month without resorting to swiping your credit card - and paying high interest on every purchase you make. By opting to skip a large payment on a loan or credit card, you'll free up cash for your daily expenses so you don't finish the month in the red. Summertime is so much sweeter when you're not sweating about your bills!
2.) Longer loan term
It's important to remember that by skipping a payment, you're lengthening the life of your loan. True, you're skipping a payment now, but you'll need to make that up one day. You're essentially moving this month's payment to the end of the loan.
3.) Accrued interest
While you won't be racking up credit card bills with high interest rates this month - thanks to the extra cash you'll have - you will be billed for interest on the skipped loan or credit card payment. You'll need to pay that up at the end of the loan term. This means you'll end up paying a bit more in interest during the life of the loan.
Did You Know?
- Many people fall out of the habit of making their monthly payments when they choose to skip just one payment. Payment history influences credit scores most, putting you at significant risk of hurting your score if you skip a payment without your lender's permission. Remember: this is a one-month-only deal! Be sure to make your payments next month.
- The popularity of skip-a-payment programs plunged at the turn of the millennium. They are now offered almost exclusively by credit unions, with very few banks still offering them.
- If you feel like you could use skip-a-payment every month, you may be in financial trouble. Speak to a Wasatch Peaks member representative for advice on money management, debt counseling and budgeting tips. We're always here to help!
Want to hit the road without worrying about bills? Call, click or stop by Wasatch Peaks Credit Union today to learn about our skip-a-payment program. Take a break from your loans!
Have you ever taken advantage of your credit union's skip-a-payment offer? Why or why not? Share your experience with us in the comments!