Monday, March 4, 2013

Skip-a-Payment

Does an aggressive promotion of skip-a-payment embody a core credit union principle of of promoting thrift?

In the opinion of one credit union CEO, it does not.

According to Bruen's Credit Union Blog, the "aggressive promotion and encouragement to use this program goes against the credit union grain. Skipping payments is hardly a good practice for any member since it keeps them in debit that much longer."

Chuck Bruen, the CEO of First Entertainment Credit Union in California, was reacting to a story about a 400 percent increase in skip-a-payment fees at Alabama's largest credit union, Redstone FCU.

Read the blog post.
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3 comments:

  1. AnonymousMarch 4, 2013 at 8:29 AM

    Good for Mr. Bruen, he's honest.
    The skip a pay would be impressive if there was no fee.
    Believe this is largely military personnel. Why not let them skip a pay for holiday shopping ... Because they serve our country?
    And, if they're not military, why not?
    Here is why.
    Credit unions in large numbers have moved from quaint little cooperatives to become very bank like.
    Many do not serve the undeserved - they fee them.

    ReplyDelete
  2. AnonymousMarch 4, 2013 at 8:15 PM

    I am a former CU employee and I can tell you that the argument from the CU would be that a healthy CU is good for the members. In this circumstance I did not think it rang true. Also I have read enjoyed your blog for years. Do not always agree but a great blog.

    ReplyDelete
  3. AnonymousMarch 7, 2013 at 3:11 PM

    Skip a payment is good for the member. It provides them relief. Whether the credit union charges a fee is no concern as long as the member is aware of everything. The member knows about the fee, they know about the extension of term. They should know everything about the conditions then they must make the decision to apply for a skip-a-payment or not. It is up to the consumer NOT others making decisions of what is good or bad for them. The old message of “Skipping payments is hardly a good practice for any member since it keeps them in debit that much longer" does not explain it very well. How much longer is the term and is the member aware of it. It appears to me that when a credit union charges a fee, it is considered bad.
    When you refinance a loan for the member it may put them in debt longer. Is this good or bad? The member wants it and needs it. You may charge a fee and maybe even a higher rate. Overdraft courtesy pay, if the member elects it, will be connected to a fee, the member has opted in and has accepted the fee for the service.
    We need to let people think and make decisions for their self as long as everything is disclosed properly.
    It appears that because this credit union made a lot of income from fees associated from this type of transaction it rubbed some the wrong way. Perhaps they are jealous.

    ReplyDelete

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