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Skip, skip, skip…a Pay

The changing economic landscape has put many consumers on edge. The forward march of the Fed to continue increasing the interest rate has pushed up the cost of living for everybody.

Debt Continues to Rise
Recent data shows the average household debt growing with a very large change in the credit card environment. The credit card debt is like the canary in the coal mine. It is easy money to access.

Credit card interest rates are now hovering close to 20% and many households are maxing out on their balances. This forces people to take a hard look at what they own and what they buy.

Some experts, like Ted Rossman, senior industry analyst at Bankrate recommend the following to get a handle on the increased household debt load.

“Take on a side hustle, sell stuff you don’t need, cut your expenses,” he said. “A dollar saved is a dollar earned, and every dollar of credit card debt that you pay down has an average guaranteed tax-free return of about 20%.”

Consumers are looking for answers right now and financial institutions can help.

The Skip-a-Pay Returns
Skip-a-pay loans have been popular for years. It’s a simple concept with big benefits. And it’s one that consumers appreciate. Especially right now as things are tightening.

The concept is simple, and you can use with many types of accounts.

For instance, if you have an auto loan that you want to promote for your skip, simply allow the consumer to skip the next payment, and add that payment to the end of the loan. Some institutions add a small charge for the convenience which helps to offset the loss in the loan revenue.

An example might be a $600 car loan payment that you allow to skip for a $75 convenience fee. That $600 gets added at the back end of the loan so you haven’t lost it.

In most circumstances, this is a win for both you and your account holders as the small price they pay to skip a loan is a big benefit over the next payment they may have to make. That extra breathing room might be enough to help them avoid missing a payment and incurring late charges or start a downhill slide.

Here are some examples of skip-a-pay promotions that we have completed for our customers. Let us know if we can help you with yours.