Why You Shouldn’t Fall for “Christmas Skip-a-Pay” Ploys


christmas-975597_640As I walked down to my mailbox last week I was expecting to get the usual: junk mail and maybe a bill or two. The end of the month is approaching and that usually means getting all my statements and bills for the following month. (Yes, I’m old-school. I like getting paper statements in the mail.)

After sorting through and initially tossing out junk mail and adding a bill to my bill pile, I saw an envelope hand-addressed to me from my local credit union.

That’s weird,” I thought as I proceeded to open the envelope. That’s when I discovered the latest money-making ploy the local credit union has come up with – “Christmas Skip-a-Pay”.

Here’s what the “friendly” letter said.

“Tis the Season for Christmas Skip-a-Pay! If you qualify, you can have extra money to spend on your Christmas shopping. Upon request, you may skip your November or December loan payment(s) for one month.”

Sounds great, right? Who wouldn’t want more money for Christmas shopping!

That’s when they hit you with the fine print:

“This agreement extends the repayment period of your loan(s). The finance charge will continue to accrue on your unpaid balance from the time of your last payment. Total interest paid on the loan may be greater than was originally disclosed to you.”

Later on they also state that there is a maintenance fee of $10 per loan for every loan you decide to skip a payment on.

The low price for getting some extra money?to spend on Christmas is $10 up-front, a longer loan term, and paying extra interest. What a service!

The sad part is, I actually thought about applying for half a second.

I thought I could apply the money from my “skip-a-pay” toward my high interest credit card debt instead. If I were to exercise the stone cold willpower it takes to do that with the “extra money” I had from skipping a payment, I could possibly end up saving money.

Luckily, common sense and the super-nerd in me who would’ve had to calculate to the penny how much I’d save (or not)?kicked in and I ripped the flier in half. (Then I taped it back together so I could write this post.)

I’m really glad I didn’t fall for this trick, although I’m sure many people will as it seems like similar programs are offered across the country. It’s bad enough if they fall for it with one loan one year, but I’m sure there are many who will apply for the program for multiple loans every year the program is offered.

Let’s think about the costs of skipping a payment.?If you have a five year loan and you participate in this program every year, you’ll have spent an extra $50 on the maintenance fees, plus the extra money on interest for the payments you skipped, and your loan term will be extended by at least an extra five months past the date on your original loan agreement.

You could have just taken on a short-term side hustle to make extra money, or planned ahead with your budget to help you pay for Christmas gifts instead. If you stick to your Christmas budget, neither of those options will end up costing you extra money or extending the amount of time you are in debt. That sounds like a way better deal to me.



Have you ever heard of a program like this? Did you ever fall for it? How are you going to pay for extra expenses this holiday season?



Photo courtesy of: jkrebs

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  1. Wow, I’ve never heard of this option. It sounds terrible, even before you get into the fine print because… interest.

    Glad you snapped yourself out of it!

  2. Amanda says:

    I have never heard of this before! Thanks for sharing, I’ll definitely be on the look out. I usually pay extra on my student loan payments and that bumps out the next due date on my account. It’s easy to fall for it and not pay the bills in a month where you need extra money but it costs you in the long run!

  3. I hadn’t heard of this one either, but it doesn’t really surprise me. Unfortunately, most people who get such a notice will think the credit union is doing it in the holiday spirit and never both to read the fine print, but the buyer must beware (or borrower in this case)!

    • Kayla Sloan says:

      I agree! I think most people simply see it and say “Cool! This seems like a great idea so I can buy Christmas presents.” Too bad they never read past the first part of the flyer.

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