’Tis the Season to Stop Digging!

I like credit unions, I really do. I’m a customer of both banks and credit unions, and my credit union handles more of my money than my bank does.

But:

A person skipping from stone to stone

Some things can’t be safely skipped. (Image by DaniDF1995 on Wikimedia Commons.)

My credit union, and perhaps many credit unions, have offered me an “opportunity” this holiday: I can skip my next loan payment, either December or January, which is supposed to let me “put more cheer” in my holidays and help a local children’s hospital to boot. What could be more festive?

Let’s break it down:

  1. I get to help the hospital by giving them $5. I can do this any time; I don’t need my credit union’s assistance with my charitable giving, although I suppose I’m always ready to hear new options.
  2. But this particular $5 is part of the $30 processing fee for skipping the payment. Which they’ll be happy to add to my loan balance if I don’t pay it directly with the request.
  3. Then of course there’s the real Scrooge part: interest continues to accrue. Interest always accrues, folks. Every time any store, bank, or other business is going to do anything “for” you that involves extra time for making payments, just assume they’re getting their money’s worth on the accrued interest. No interest for two years on that new furniture suite? I guarantee the minimum payments will not pay it off in two years, and I guarantee the interest will retroactively kick in from the purchase date if you don’t make up the difference before the two years are up.

One of the things I really don’t understand is the processing fee. Oh, sure, I understand that any fee you can get consumers to pay is a good fee, and perhaps the numbers bear this out. Who knows, maybe even borrower psychology is such that we’re more likely to take advantage of this “opportunity” if there’s a fee involved. But my paying you for the privilege of being able to pay more later, well, bah humbug!

Keep those Christmas expenses on a tight leash, so that your normal loan payments and other fixed bills don’t get forgotten in the mad consumerism.

—jhunterj

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