CUs adding skip-a-pay programs to boost fee income
Skip-a-pay loan payment deferral programs are increasingly becoming an option for credit unions that are looking to help struggling members and bring in additional fee income at the same time.
The programs allow members who might need some extra money in a given month to “skip” a payment by pushing it to the end of the loan term. The arrangement generates a little extra money for the institution through the attached fees.
Many credit unions now have skip-a-pay programs, which are a form of loan modification, said Vincent Hui, managing director at Cornerstone Advisors.
Otherwise, the program just “kicks the can down the road” for a loan that could eventually become delinquent and maybe charged off, Hui said.
Mountain Home, Idaho-based Pioneer Federal Credit Union recently extended its partnership with Portland, Oregon-based Tyfone to include the digital banking provider’s Skip-a-Pay solution.