Q: 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-payment. What do I need to know about this program?
A: 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, Resource One Credit Union offers an exclusive break from your loan payments during this costly time of year. Now that sounds like a dream vacation!
Skip-a-payment is a program that allows members to skip a monthly loan payment during an especially tight financial season. At Resource One you can choose to skip-a-payment during the holiday season, during the summer, or just when you need the extra cash. Members can choose to skip a payment twice per rolling 12 month period with the maximum of five for the life of the loan. There is a small fee attached to the payment omission.
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:
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!
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.
While you won’t be paying your loan this month you will be billed for interest on the skipped loan. 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 Resource One financial counselor 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 Resource One Credit Union today to learn about our skip-a-payment program. Take a break from your loans!