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Skip-A-Month from the Credit Union

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Once or twice a year our credit union will pre-approve us to skip the monthly payments on all of our loans.  They offered it for July and after discussion and some math–we took them up on it.  The interest rates on all three loans with the credit union are significantly less than our other debt.  (2.9% on both vehicles, 11.9% on the signature loan).  We were able to send a larger payment to Bank of America (the lender I hate more and more every day) today ($1200 instead of $580), pay extra to the smallest balance card ($100 instead of $50) and free up some cash for the inevitable vacation spending (so that we didn’t incur more debt while on the trip).

This time I write to inform…not seek opinions to act.  However, I always welcome feedback (the good, the bad and the ugly) on this financial decision.  I’m here to read these this time and won’t be replying due to current time constraints.  Did I mention I had work travel this week?  Overnight Wednesday to late last night.  I’m a walking zombie at the moment.  Note to self:  mark myself “unavailable for travel” the week after vacation! Bring on the weekend!


6 Comments

  • Reply Maggie |

    My only advice for next time is to read all the fine print on bank-offered “skipped” payments. Your credit union’s rules may be totally different than my bank so this may not apply to your skipped/delayed payment … but this was my experience.

    My bank offered me a “skipped loan payment” one Xmas time, and I took them up on it. It turns out that the way they calculated it, by tacking on the skipped payment to the very end of the loan, ended up costing me much more in interest than I had anticipated.

    But like I said, your skipped/deferred payment may have different consequences. I just wish I had really read the fine print and crunched the numbers more carefully in my situation.

  • Reply Adam |

    I would have just kept the normal payments but this may work out well. There’s only one thing…prolonging your debt payment to make money available for “inevitable vacation spending.” if that money wasn’t there would the spending still be inevitable? You may have saved yourself $100 in interest by paying the higher rate card first but if you spend an additional $100 on vacation then all you’ve done is lengthened your payback schedule so you could spend more on vacation. Effectively vacationing on credit

    So think about doing this. Add up the total $ amount of the skipped payments and make sure you pay at least that much extra on your other cards to make sure you’re not cheating yourself. Just my suggestion.

  • Reply emmi |

    I’m always in the pay the highest rate/most annoying bank first camp, so sounds like a good plan to me!

  • Reply Skrpune |

    The math on this one works out well (as long as your bank isn’t all cranky-like and there are no penalties associated with the skip). It’s a mathematically sound decision to apply higher payments to the higher interest debts in lieu of sticking to the regular schedule. And even if your skipped payment results in slightly more interest being paid on the debts with that institution, it will likely be far outweighed by the interest you just avoided by making extra balloon payments on the higher interest debts.

  • Reply Janelle |

    As long as they don’t charge you some horrible fee, I don’t see a problem with it. Plus as long as you’re still using it for debt reduction (and making sure you had enough $ for vacation is good too).

    Plus sometimes having that big chunk to send to your most hated lender can really give you an emotional boost and recharge your motivation! Sounds like it was a good choice for you!

    PS – I understand the hate of B of A. I owe them just another $350 on our van. I can’t wait to pay them off in 2 weeks!

So, what do you think ?