Skip-A-Pay: A Summer Break from your Loan Payment
Q: Summer puts a strain on my budget because of extra expenses! I’ve been looking for a way to get through it without racking up a huge credit card bill. I’m considering skip-a-payment. What do I need to know?
A: Summer expenses can bust any budget. Skip-a-payment will give you more breathing room during this expensive time of year.
For a loan to qualify for skip-a-payment, it needs to have a term of 12 months or more, have been open for at least 12 months and have a good payment history for six or more months. Skip-a-payment may be available on most loans, though some lenders allow it only for fixed, closed-end consumer loans, but not for credit cards, lines of credit or first mortgages. Most credit unions require you to be up to date on your loan payments, and for you to have enough funds in your checking account to cover the associated skip-a-payment fee. Many credit unions offer this program during the holiday season and again during the summertime.
Skip-a-pay is a program offered by Truity Credit Union allowing members to skip a monthly loan payment during an especially tight financial season for just a small fee. At Truity, most members are eligible to skip two payments a year with a minimum of four payments in between skips.
Here are some important points to consider before you decide to skip a payment:
1.) Breathing room
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 skipping a lower interest loan payment, you can use that payment amount to help your financial situation like paying off a credit card.
2.) Longer loan term
Skipping a payment means lengthening the life of your loan. You are 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, you will be billed for interest on the skipped payment. You’ll need to pay that up at the end of the loan term.
Did You Know?
- Many people fall out of the habit of making their monthly payments when they choose to skip just one payment. Remember: This is a one-month-only deal! Be sure to make your payments next month.
- The popularity of skip-a-payment plunged at the turn of the millennium. It is now offered almost exclusively by credit unions, with very few banks still offering it.
- If you feel like you could use skip-a-payment every month, you may be in financial trouble. Speak to a Truity Credit Union member service representative for advice on money management, debt counseling and budgeting tips.
Want to hit the road without worrying about bills? Learn about our skip-a-payment program.