Skip your december credit card payment for just $35!

[JZinCO]

I like my credit union, but as I read this I had to share:

The holiday shopping season is just around the corner ... and that means a few extra expenses for many of us.  Those little extras can cause a BIG dent in your budget.
 
Not to worry!  Credit Union to the rescue with our holiday "Skip-A-Pay!"
 
If you have a vehicle or other consumer loan from Credit Union . . . or have a VISA Credit Card . . . you can SKIP* your December 2015 payment for a very modest charge!
 
Whether you want to buy gifts, make that special trip . . . or for any other reason important to you . . . this program can help free up the extra cash you need this holiday season.
 
Eligible Members who skip their December consumer loan or credit card payment can do so without penalty for only $35.00 for each loan or credit card payment you choose to skip.

eyeroll...

[MgoSam]

Not gunna lie, for most consumers, this is brilliant!

[JZinCO]

I'm worried someone who is carrying around debt is gonna say "hey $35 beats $45!. I'm in!" without considering that (a) their principle won't be lowered and (b) their interest keeps doing up over December.

If I had a large amount of debt, yeah I run the numbers and maybe take it. But the deal relieves the pain of debt, which should hurt and should incentivize borrowers to pay it off.

[JLee]

I've seen that for car payments as well (offers to pay the interest or X amount and effectively defer the payment until later).

[Beaker]

Does it actually let you

(b) their interest keeps doing up over December.

Huh, seriously? I thought there were some consumer protection laws that required the minimum payments to pay off the debt in some maximum amount of time. If not, I'm surprised that the less-scrupulous banks wouldn't offer some sort of alternative payment scheme all the time to keep the interest running up.

[JLee]

Does it actually let you

(b) their interest keeps doing up over December.

Huh, seriously? I thought there were some consumer protection laws that required the minimum payments to pay off the debt in some maximum amount of time. If not, I'm surprised that the less-scrupulous banks wouldn't offer some sort of alternative payment scheme all the time to keep the interest running up.

I'm not sure I understand. Minimum payments will pay off the debt...eventually...but doing a skip-payment doesn't mean the bank just refunds your month's worth of interest.

[JZinCO]

This article might clear things up: http://www.creditcards.com/credit-card-news/credit-card-skip-payment.php

[johnny847]

Haha I got the exact same email.

I love their interest rates on their checking accounts, but whatever happened to credit unions "being the good guys"?

[JZinCO]

Haha I got the exact same email.

I love their interest rates on their checking accounts, but whatever happened to credit unions "being the good guys"?

It's to pay for us folks taking advantage of the rewards system :)

[Shor]

After some brief googling, there is no law directly, but federal guidance in 2003 (as in very strong words from multiple federal agencies) tell the banks that the minimum payments need to amortize the principal within a reasonable amount of time. They didn't force them to use a set formula, and by 2005 banks individually came up with their own formulas for determining minimum payments to include a little bit of principal + interest and fees

So a one-time thing like this "deal" is okay since it's not the standard month to month minimum charge. It is certainly pushing the limit though.. For sure it's creative, and has that hook if you don't want to do the math or check the details


Haha That article about the skip-payments with the $5000 debt @ 11.99% APR.. it hurts just to think about that growing each day..

http://www.creditcards.com/credit-card-news/minimum-credit-card-payments-1267.php

[JLee]

Haha I got the exact same email.

I love their interest rates on their checking accounts, but whatever happened to credit unions "being the good guys"?

I'm actually switching over to a bank.  My credit union started charging me an unavoidable $3/mo fee a few years ago. Chase gave me a couple hundred bucks to open a checking account there.

[Beaker]

Does it actually let you

(b) their interest keeps doing up over December.

Huh, seriously? I thought there were some consumer protection laws that required the minimum payments to pay off the debt in some maximum amount of time. If not, I'm surprised that the less-scrupulous banks wouldn't offer some sort of alternative payment scheme all the time to keep the interest running up.

I'm not sure I understand. Minimum payments will pay off the debt...eventually...but doing a skip-payment doesn't mean the bank just refunds your month's worth of interest.

Seems like they could find an excuse to let you skip a payment every month, thus charging you for the skip and racking up more interest. Skip December for Christmas, January for New Year's, February for... I don't know, President's Day? And now you owe the bank a bunch more money but they didn't have to send any cash to a merchant so their actual risk isn't much higher. Seems like a great deal for the bank, hence I would expect that they'd push it pretty hard.

I haven't heard of this scheme, so I was speculating that some consumer watchdog group won't let them do it, or at least not do it too much. Which seems to be sorta-kinda the case per Shor's post.

[JZinCO]

Looking into it, it appears many credit unions let you skip a payment once or twice per year, up to their discretion. On a large, large loan, imagine the consequences over time.

[johnny847]

Haha I got the exact same email.

I love their interest rates on their checking accounts, but whatever happened to credit unions "being the good guys"?

I'm actually switching over to a bank.  My credit union started charging me an unavoidable $3/mo fee a few years ago. Chase gave me a couple hundred bucks to open a checking account there.

Oh I chase bank bonuses, no question about that. I've gotten almost $2000 YTD in bank bonuses.

But I will continue to use this credit union so long as they're giving me a better interest rate (3.09%) and there's no fees.

[JLee]

Haha I got the exact same email.

I love their interest rates on their checking accounts, but whatever happened to credit unions "being the good guys"?

I'm actually switching over to a bank.  My credit union started charging me an unavoidable $3/mo fee a few years ago. Chase gave me a couple hundred bucks to open a checking account there.

Oh I chase bank bonuses, no question about that. I've gotten almost $2000 YTD in bank bonuses.

But I will continue to use this credit union so long as they're giving me a better interest rate (3.09%) and there's no fees.

Wow, yeah that's pretty slick. I should start shopping for a better bank - 3% would be really nice.

[JZinCO]

Haha I got the exact same email.

I love their interest rates on their checking accounts, but whatever happened to credit unions "being the good guys"?

I'm actually switching over to a bank.  My credit union started charging me an unavoidable $3/mo fee a few years ago. Chase gave me a couple hundred bucks to open a checking account there.

Oh I chase bank bonuses, no question about that. I've gotten almost $2000 YTD in bank bonuses.

But I will continue to use this credit union so long as they're giving me a better interest rate (3.09%) and there's no fees.

I've been going after the 4.09% interest, fulfilling my obligations with 24 $0.50 amazon credits monthly :D
Granted I just deployed 5K from that account to another bank for a sign-up bonus. Seems our philosophy on chasing higher interest and rewards are akin.

[robartsd]

As long as a consumer making the maximum allowed use of "Skip a Pay" and only paying the minimum for other month's still pays off the loan in a "reasonable" time period it sounds like this would remain legal (though certainly still worthy of the Antimustachian Wall of Shame).

[johnny847]

Haha I got the exact same email.

I love their interest rates on their checking accounts, but whatever happened to credit unions "being the good guys"?

I'm actually switching over to a bank.  My credit union started charging me an unavoidable $3/mo fee a few years ago. Chase gave me a couple hundred bucks to open a checking account there.

Oh I chase bank bonuses, no question about that. I've gotten almost $2000 YTD in bank bonuses.

But I will continue to use this credit union so long as they're giving me a better interest rate (3.09%) and there's no fees.

Wow, yeah that's pretty slick. I should start shopping for a better bank - 3% would be really nice.

You gotta jump through hoops. Three of them are easy. The last one, 12 debit card transactions, is the one that can be annoying.

I have a couple friends who have an account, so we just square cash each other money in a triangle.

And the 3.09% rate only applies to the first $10k (but I always have less than that in there anyways).

As JZinCO said above, you can get 4.09% (or even 5.09%) actually. But to get the 4.09% you need a cc from them, and I didn't want to apply for a credit card with them.

[johnny847]

Oh I chase bank bonuses, no question about that. I've gotten almost $2000 YTD in bank bonuses.

But I will continue to use this credit union so long as they're giving me a better interest rate (3.09%) and there's no fees.

I've been going after the 4.09% interest, fulfilling my obligations with 24 $0.50 amazon credits monthly :D
Granted I just deployed 5K from that account to another bank for a sign-up bonus. Seems our philosophy on chasing higher interest and rewards are akin.

Yup. Chasing bank account bonuses is some of the easiest money I make. And occasionally I'll fund a bank account with a cc without incurring fees, complementing my chase of cc signup bonuses.

[JZinCO]

I was sort of throwing my good credit union under the bus initially (hence I haven't named them)... but now that we are discussing their merits. If anyone wants to sign up to get 3-5% interest on up to $20K and receive a small bonus, PM me.

[krstfrb]

I'm thinking this is probably not a good idea, but I gotta ask for all you math whizzes out there :) I thought I was gonna get fancy and skip a payment on my car loan at 1.77% to take that amount and put it toward my 6.55% student loans. It would be about $900. Does that make sense to do with the $35 charge?

Thanks!

[slugline]

I'm thinking this is probably not a good idea, but I gotta ask for all you math whizzes out there :) I thought I was gonna get fancy and skip a payment on my car loan at 1.77% to take that amount and put it toward my 6.55% student loans. It would be about $900. Does that make sense to do with the $35 charge?

Thanks!

One month's interest on the $900 student loan principal is less than five bucks. I would say this would be an unwise move.