Should you request a payment holiday from your creditors?
PITTSBURGH (KDKA) -- This time of year, everyone is looking for an extra dollar or two to get everything for the holiday season -- but there are advisable ways to go about it and some that aren't ideal.
KDKA's John Shumway is here to explain.
The monthly responsibilities don't go away just because the calendar turns to December. So many people may be asking about whether or not they should reach out to creditors for a payment holiday.
You won't find it on any calendar...so just what is a payment holiday?
"When you ask your creditors if you could skip a payment for a month, you could do this with a credit card company," said Advantage Credit Counseling Service's Heather Murray. "You could try it with a mortgage company, but basically it's allowing you to miss one month's payment. "
Murray says that while you can make the request, there are consequences to seriously consider.
"Especially with a credit card company, you would want to make sure you understand completely how they're reporting that payment to the credit bureaus," Murray said. "Are they reporting it as a missed payment? Or are they reporting it as an on-time payment even though you did not make the payment?"
Another important question to ask is if it will impact next month's amount due. Murray doesn't recommend a payment holiday, especially with your mortgage company.
"Going behind on that mortgage payment could really, you know, put your housing situation at risk," Murray said.
Instead, she says to look to find extra money in your day-to-day spending.
"Even just like, stopping eating out, you know, for a couple of weeks could give you some extra holiday spending money," Murray said.
Since you'll be eating more at home, Murray suggests trying to cut back even more on things like going meatless for a couple of meals per week, and cooking with fresh ingredients, as processed box meals tend to be more expensive.
It may not sound like much, but Murray says that cutting back on eating out and making those meal adjustments will save more than you might think.
If your credit card company or mortgage provider send you an offer in the mail to divert a payment, those type of things generally have the same impact.
You need to find out if, or how they'll report to the credit bureaus. Murray says that taking a payment holiday could potentially drop your credit rating by anywhere from 25 to 50 points.