Credit Unions Offer Unique Post-COVID Solutions

 

Since credit unions are member-owned, not-for-profit institutions, many have created new pandemic-centric programs. Here are some of the post-COVID solutions CUs are offering to help their communities while generating business. We’ve also included a unique opportunity for credit unions looking to add to their offerings.

Short-Term, Low Rate Personal Loans

Credit unions have stepped up to help their members by offering 3-month and other short-term loans at or near zero percent interest. These short loans are often called pandemic relief loans.

Individuals and businesses are using them to bridge the gap caused by lost wages and reduced business. These “small dollar” loans are being compared to stimulus checks that each individual gets to control and define.

Financial Counseling

Unlike big banks, credit unions don’t take advantage of their customers’ financial ignorance. Though this isn’t a new offering, offering financial counseling is a major asset right now. No one was prepared for a pandemic or its effects, but punishing customers for their lack of knowledge creates brand distrust and hurts your bottom line and your customers’ livelihood. Credit unions have adjusted hours and protocols to offer one-on-one counseling to their members throughout this crisis.

Financial counseling is another example of how credit unions have been focused on helping their communities well before COVID-19.

Waiving Fees

Though it seems counterintuitive, many CUs were encouraged to waive fees. Eligible fees include ATM withdrawals, early withdrawals on timed deposits, credit card balances, loan balances, late payments, and more.

Increasing Credit Card Limits

CUs are increasing credit card limits to accommodate the lack of cash flow from shutdowns and decreased capacities. This solution does not include all memebrs. However, increasing credit for trusted borrowers creates business for the CU and eases the financial burden temporarily for members.

Deferring Payments

Similar to the pandemic relief loans, credit unions are also generously deferring monthly payments. Members are grateful for the choice to defer a payment for one month, giving them time to recover lost finances.

IMS Integration’s software includes Skip A Pay, which can help your credit union easily process these deferments.

Bonus: Small Business Service Opportunity

Nearly six in ten small businesses said they’re at least somewhat likely to look for a new banking relationship in the next year, according to this Forbes article. Many of these small businesses accept upwards of 10 different payment types. But why does this matter to your credit union?

Processing these payment types through a third-party service includes fees. These fees make it even harder for small businesses to turn a good profit. And as COVID measures continue to affect the economy, small businesses are looking for ways to cut costs. This is where the opportunity comes in: credit unions should consider providing accounting and payment services to SMEs (small- and medium-sized businesses).

Offering these services generates business for you and provides your local business owners with a valuable service.

Final Thoughts

Though it feels like things are shifting toward a new normal, many of your members are still struggling to adapt to the changes caused by COVID-19. By now, nearly all government-mandated relief efforts have ended.

This creates a huge opportunity for your credit union to re-evaluate programs and pick up that slack to help your communities bounce back even faster. These efforts also generate business, so it’s really a “help us help you” situation.

Upgrade Your Software Today

IMS Integration offers unique solutions of its own for credit unions. Contact us to learn more about how our member-facing web solutions can help you better serve your members.


The Importance of Offering Skip A Pay

 

Many Americans are still struggling financially after the last few months of layoffs and shutdowns, some of which are going back into effect after being eased earlier in the summer. 30% of Americans missed their June housing payments – this is up from April’s 24%. In these unprecedented times, financial flexibility is a top priority for credit union members. It has never been more important to offer your members a Skip a Pay option.

Many individual financial and housing institutions are offering things like 3 months of forbearance on mortgage payments or paused rent payments for those whose workloads are negatively affected by layoffs and downsizing in this crisis. But smaller debts, like vehicle loans, are not always included in these provisions.

But what is Skip A Pay and why is it important?

What is Skip A Pay?

Skip A Pay is a flexible payment offering that allows credit union members to defer one monthly loan payment in a rolling period, which can be restricted to as little as once every 12 months or as often as every 90 days. Loan payments resume as usual in the month that follows a skipped month. 

The skipped payment amount is tacked on to the end of the loan and extends the time on the loan by one month for each Skip A Pay fulfilled. The loan total is not affected by skipping a payment, but interest does still accrue through the new end date of the loan.

Typically, these loans are eligible for the Skip A Pay option: vehicle and recreational vehicle loans, recreational loans, unsecured personal loans, and more.

The Importance of Skip A Pay

Stalling a single monthly payment doesn’t hurt the member’s credit score, though overuse can result in higher interest amounts paid over the life of the extended loan. While it is not a good idea for members to make Skip A Pay a habit, it is a great choice for those who need a bit of flexibility in their payments so as to pay other, higher-interest debts when money is tight.

Offering a Skip A Pay option gives members the chance to ride out short term crises with little penalty.

There are also negatives to a Skip A Pay program, for credit unions and their members. If a program is rolled out and it doesn’t have a satisfactory evaluation process for eligibility, members who overutilize the option could accrue more debt through the increased interest, and credit unions could have difficulty collecting timely payments if a good schedule for using Skip A Pay is not put in place.

Forgo the Hassle with Skip A Pay

IMS Integration offers a unique approach to setting up a Skip a Pay batch eligibility evaluation process that is customized to your credit union’s preferences. The process evaluates loans based on custom criteria set by your credit union and adds notes to eligible and non-eligible loans for ease of processing.

IMS Integration’s customized Skip A Pay program could be the solution to your credit union’s needs. Contact us to discuss your credit union’s software upgrade options.