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.
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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.