Palisades FCU Offers a Double Up Twist on Skip-A-Payment Program
The $147 million Palisades FCU offered its members a take-the-summer-off loan program. The program allowed members that are in good standing to skip their July and August payments on all loans except first mortgages. While many credit unions offer a program allowing members to skip a payment on their loan charge a processing fee, Palisades charged no fee to its members who decided to take advantage of the program. The only stipulation was that members understand that the loan continues to accumulate interest.
"We noticed that inflation was quickly rising and that unemployment was rising and thought this would be a good way to give back to members," said Anthony Pili, marketing coordinator at Palisades.
From June 2007 to June 2008, total delinquencies on loans at Palisades decreased from 0.74% to 0.73%. However, from March 2008 to June 2008, the credit union saw a large increase in loans delinquent by one or two months, jumping from $143,822 in March to $842,190 in June. The dollar amount of credit union's total delinquent loans also increased by 40.9% from March 2008 to June 2008. Chief Operating Officer/Vice President of Member Services Sean Jelen said the rise was attributed to one member and does not reflect the whole of the credit union. The promotion, Jelen said, was in response to and in addition to the government's economic stimulus package.
"The combination of higher inflation and slower wage growth had led to falling real hourly and weekly earnings for many workers in the Hudson Valley. This dramatic shift in the buying power of workers' paychecks is forcing many families to cut back this summer. Palisades is there for me when I need them most. This summer program will help me tremendously," said Melva Haggins, a member at Palisades for over 35 years.
Pili said that the credit union received quite a bit of press about the program and that it was even featured on "The CBS Evening News."
West Community Credit Union in St. Louis, Mo., has offered its members the skip-a-payment program on all loans except for home equity loans, mortgages and credit cards for the past four years. Unlike Palisades' program, which is a summer promotion, West Community offers the program all year round. Members can use the program once every 12 months and can't use it more than three years in a row.
West Community charges a $25 processing fee for members who chose to use the program, which Marketing Director Micki Milonas said goes back to the members. Milonas said that there are many credit unions that offer this program and have different ways of doing it. Some credit unions, Milonas said, contributed the fee to organizations such as the Children's Miracle Network.
"It's a good thing for people who need it," Milanos said. "But it's important that it's done right and responsibly we don't want it to put our members in bad standing."
Milanos said that even though the credit union offers the program year round, it usually only promotes the program during the holiday season by mentioning it in its holiday newsletter.
"We have people who do it and really like it and do it every year during vacation time or the holidays," Milanos said. "People use it and get used to it, and it helps them out when they need it."
Tigers Credit Union in Columbia, Mo. also offers a skip-a-payment program to its members. President/CEO Christos Cossyphas said that the program has been a big benefit to credit union members, which are mostly students.
Like West Community, Tigers offers the program all year, charges a $20 processing fee, and Cossyphas said that Tigers doesn't actually promote the program until December. Members can skip payment only once a year and three times over the life of the loan.
"Student's are strapped for cash at the end of the semester, and the program gives them extra money for the holidays," Cossyphas said. "We don't force it. We don't even have it on our Web site, but it helps people in a bind."
Personally, Cossyphas said that he motivates members to not take out loans for more than they absolutely need and to pay them down quickly. However, he said that he felt the credit union needed to offer the program because it is useful to members and if members who need help can't come to their credit union, they could end up going to predatory lenders.
Tigers started offering the skip-a-payment program less than a year ago as an alternative to offering its members holiday loans.
Digital Federal Credit Union in Marlborough, Mass., also offers a skip-a-payment program throughout the year. Public Relations Manager John Lahair said that the credit union started offering the program in the spring of 2006.
DCU charges a $25 processing fee that Lahair said covers administrative and overhead costs. The program can't be used during the first 12 months of a loan agreement, and a member can only skip a payment once a year and three times over the loan term. The program also doesn't include Visa card, advantage credit line, home equity, mortgage or indirect loans.
All the skip-a-payment programs here can only be used by members in good standing.
For members not in good standing, Jelen said that Palisades is doing everything possible to help those members and is working on several other surprises to help out members during these economic conditions.