All You Need to Know About Skip-a-Payment

Skip-a-payment is a program allowing members to skip a monthly loan or (with some institutions) a credit card payment without penalty during an especially tight financial season. Most credit unions offer this program during the holidays and during the summer vacation season.

Here’s what you need to know about skip-a-payment:

How skip-a-payment works

Depending on the credit union, skip-a-payment is available to qualifying members once or twice a year. Some offer it year-round, but the vast majority limit the availability. The program is generally only allowed for loans with terms that are 12 months or longer, have been open for at least nine months and have a good payment history of six or more months. Credit unions allow it on most loans, with the exclusion of all real estate loans. Others only allow the payment break on fixed, closed-end consumer loans like auto and signature loans (so it would not be available on lines of credit or credit cards in that case). 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 a nominal associated fee.

At Zing Credit Union, we offer a skip-a-payment program during certain times of the year. If you are considering skip-a-payment, check out our skip-a-payment program, call, or stop by to speak to a member representative for full details.

Why choose to skip a payment

The primary benefit of choosing to skip a payment is to gain some extra cash flow. During an expensive time of year, such as the summer or holiday season, members may be strapped for cash and forced to use their credit cards – and pay high interest rates – on every purchase they make. Skipping a large payment on a monthly loan or credit card frees up funds for day-to-day expenses so they don’t finish the month in the red. Removing the financial stress also makes these times of year more enjoyable.

Disadvantages of skip-a-payment

It’s important to consider these factors before choosing to skip payments on loans or credit cards:

Longer loan term

Skipping a payment lengthens the life of a loan. The monthly payment you skip now doesn’t disappear; it is simply moved to the end of the loan. This means you’ll finish paying off this loan one month later than planned.

Accrued interest

Most monthly payments to loans and credit card balances consist of contributions to

both the interest and principal of the loan or credit card. While skipping a payment allows you to take a break from paying down the loan balance, interest still accrues and is tacked on to the end of the loan term. You’ll ultimately be paying more in overall interest over the life of the loan if you choose to skip a payment.

What you must know before skipping a payment

While choosing to skip a large monthly payment during an expensive time of year may be a good choice under certain circumstances, consider these factors before going ahead with the program.

First, many people fall out of the habit of making their monthly payments when they choose to skip just one loan payment. Payment history influences credit scores the 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 in full next month.

Second, if you feel like you could use skip-a-payment every month, you may be in financial trouble and in need of assistance. It’s best to take steps now before falling into a deeper rut. Speak to a member representative for advice on money management, debt counseling, and budgeting tips. We’re always here to help!

Truth In Savings Disclosure

TRUTH IN SAVINGS DISCLOSURE

Except as specifically described, the following disclosures apply to all the accounts.

Rate Information. The dividend rate, or interest rate, and annual percentage yield on your accounts are set forth on the reverse side. The annual percentage yield is a percentage rate that reflects the total amount of dividends/interest to be paid on an account based on the dividend/interest rate and frequency of compounding for an annual period. For Certificates of Deposit and IRA Certificates of Deposit, the interest rate and annual percentage yield are fixed and will be in effect for the term of the account. The annual percentage yield is based on an assumption that interest will remain on deposit until maturity. A withdrawal will reduce earnings.
Nature of Dividends. Dividends are paid from current income and available earnings after providing for the required reserves. The dividend rates and annual percentage yields are the prospective rates and yields that the Credit Union anticipates paying for the applicable dividend period.
Compounding and Crediting. Interest and dividends will be compounded and credited as set forth on the reverse side. The dividend/interest period for each account is also set forth on our Rate and Fee Schedule. The dividend/interest period begins on the first calendar day of the period and ends on the last calendar day of the period.
Balance Information. The minimum balance required to open each account is set forth. Interest is calculated by the daily balance method which applies a daily periodic rate to the principal in the account each day.
Accrual of Dividends. Dividends will begin to accrue on cash deposits on the business day you make the deposit to your account. Dividends will begin to accrue on noncash deposits (checks) on the business day you make the deposit to your account. If you close your account before accrued dividends are credited, accrued dividends will not be paid.
Account Limitations. The account limitations for each account are set forth in our Membership and Account Agreement
Your account will mature on the maturity date set forth on your account receipt or renewal notice.
Early Withdrawal Penalties. A penalty may be imposed if you withdraw any of the certificate funds before the maturity date or the renewal date, if this is a renewal account.
Amount of Penalty. For Certificates of Deposit and IRA Certificates of Deposit the amount of the early withdrawal penalty for your account is 90 days’ interest for a term of 12 months or less, and 180 days’ interest for a term over 12 months.
How the Penalty Works. The penalty is calculated as a forfeiture of part or all of the interest that have been earned on the account. This penalty applies to earned interest and principal.
Renewal Policy. Certificate of Deposit accounts will automatically renew for another term upon maturity. You have a grace period of seven days in which to change or withdraw the funds without being charged an early withdrawal penalty.
Exception to Early Withdrawal Penalties. At our option, we may redeem the account before maturity without imposing an early withdrawal penalty under the following circumstances:
- When an account owner dies
- or is determined legally incompetent by a court
- or other body of competent jurisdiction.
Nontransferable / Nonnegotiable. Your account is nontransferable and nonnegotiable. The funds in your account may not be pledged to secure any obligation of an owner except obligations with the Credit Union.
FEES FOR OVERDRAWN ACCOUNTS. Fees may be imposed on each check, draft item, ATM card withdrawal, debit card withdrawal, debit card point of purchase, preauthorized automatic debit, telephone initiated withdrawal or any other electronic withdrawal or transfer transaction that is drawn on an insufficient available account balance. The entire balance in your account may not be available for withdrawal, transfer or payment of a check, draft or item. You may consult the Funds Availability Policy for information regarding the availability of funds in your account. Fees for overdrawing your account may be imposed for each overdraft, item or transaction. If we have approved an overdraft protection limit for your account, such fees may reduce your approval limit. Please refer to the Rate and Fee Schedule for current fee information.

Checking Comparison Chart

Compare Checking Accounts

Preferred Checking

Clear Card

Second Chance Checking

Minimum Opening Balance

Suggested opening amount- $25

ID Safe Choice Charge Possible

Yes

Direct Deposit

Accepted and encouraged

Dividends Paid

Privilege Pay

Available after 90 days

Overdraft LOC

Available immediately, with approved credit

ATM/Debit Card

Instant Issue

Shared Branching

Available

Free Bill Payer