M&T Bank Makes An Offer You Can Definitely Refuse

Here’s a novel way for a bank to increase revenue: offer your customers a “perk” where they can skip a payment on their loan for a neat $25 fee! Of course, interest still accrues, your total repayment amount increases slightly, and one month is added to your repayment period. No thanks. You can see the actual letter and details below.

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(Thanks to Jerry!)
(Photo: Getty)

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  1. lalaland13 says:

    Seeing as I’ll be ass-raped by Sallie Mae for the next 80 years or so because of student loans, if they did this to me, I’d probably go into a rage. They already seem to think I’m stupid enough. And maybe they’re right, since I have student loans out with them and all.

    I hate Texas for removing the tuition cap. Hate.

  2. humphrmi says:

    I used to get these from LaSalle Bank (later to become ABN Amro then BofA) when I had a HELOC with them. (Of course I never took it, and paid off the HELOC early) They offered it for one month every year that you were current with your payments. For a 20 year loan, the fees and deferred interest and extra months of payments really add up.

  3. Concerned_Citizen says:

    @lalaland13: You took out a loan you have to pay back. Are you angry at Sallie Mae for letting you put yourself recklessly into debt?

  4. evslin says:

    The bank shot me one of these every year or so when I was paying off my car. Never took them up on that.

  5. lalaland13 says:

    @Concerned_Citizen: First of all, I don’t think student loans for a college education are “recklessly” in debt. I believe they’re considered “good” debt because you actually got something out of it. Secondly, if you made it through college without having to incur any debt whatsoever, good for you. You’re in the minority, though, at least if you’re in your 20s like me. Sometimes, it’s take out loans or don’t go to college. I got some scholarships and grants, but it wasn’t enough. Yes, I knew what I was doing. No, I don’t regret it. I’d appreciate it if I could make a comment about the system sucking without it being suggested that I’m recklessly in debt.

  6. Jubilance22 says:

    My credit union does this, usually twice a year. I’ve never taken advantage, but I can see how it could be attractive to some people.

  7. randombob says:

    @lalaland13:
    Well that’ll teach you to assume you can post comments about a system sucking!

  8. mdoneil says:

    The terms seem very clear and not in fine print, or hidden somewhere else.

    It may be an offer of which some customers may wish to take advantage. It would not be for me, but they are not obligating anyone, simply offering it.

  9. sled_dog says:

    “Enclosed pre-paid return envelope?”

    Heh heh heh. What could we send back in that?

  10. alstein says:

    IF you can’t pay off the loan, $25 beats whatever else they could do. That said, of course you should avoid that situation if possible, even if it means donating plasma.

  11. @Concerned_Citizen: Not so fast. Not everyone can afford to go to school without getting loans. The choice for many students is to go deep into debt or not go to school at all.

    We used to have something in this country called “financial aid.” It was mostly grants and some loans. Then it was some grants and some loans.

    Now it almost exclusively loans. And now it is a big gift to the loan corporations who can profit at no risk (the loans are guaranteed by the government) and yet these companies still manage to have problems.

  12. RChris173 says:

    The zip code for the letter in question is 14425-0166

  13. RChris173 says:

    with the last two numbers of the letter destionation’s street address being 66.

  14. Coelacanth says:

    @lalaland13: As you probably know, the “I never carry a balance” crowd is the most vocal.

    While great for life after college, it’s not so practical during it, even for the most frugal.

  15. Grive says:

    It’s actually quite a good option.

    I’ve been in situations where for some reason or another, I’m short of cash to make a payment. Hey, that’s life. Burnt house or sudden expenses happen. While staying absolutely out of debt is a nice ideal, it’s not always either feasible or smart. Debt can be a good thing if it helps you progress, either in purchasing a house, or starting up a business, for example.

    Does it suck that I’ll end up paying more? yeah. It would suck more if I were to get hit by all the shenanigans that come with a late or missing payment.

  16. stinerman says:

    @twophrasebark:

    Quite a lot of the problem is the runaway costs of higher education, especially at state schools in the Midwest. My home state of Ohio has some of the most expensive in-state tuition in the country.

    Tuition at my alma mater (Wright State University) is approaching $10,000/yr for in-state students. Notice that the University of Nevada is about half as much. I had an EFC of 0 (read: qualified for every last government program in the book) for 3 out of the 4 years I went to school and I couldn’t come close to making tuition quarter to quarter.

    Government decided not to subsidize education, but to subsidize private lenders. IMHO, it was a pretty bad move. Now quite a few of us are looking at student loan bills of over $40,000 after graduation.

  17. azntg says:

    @sled_dog: If you’re not going to send back a completed application, anything you’d like them to throw away. Excellent way to cut down on your garbage/recycling bill :-)

    @twophrasebark: Because they get greedy. If those companies were humans, I could see them yelling: “MORE! MORE! WE NEED TO EARN MORE THAN WHAT THE COLLEGE SUCKERS CAN PAY US! MOOOORE!”

    And of course, they get in trouble.

  18. Jesse says:

    @Jubilance22:

    My credit union does this too. I just laugh at the letter and shred it. Apparently some of their customers fall for this sham.

  19. geoffhazel says:

    Actually, I like it. when you get paid every two weeks but bills come monthly, sometimes things get out of synch and skipping a payment for a small fee is a pretty attractive option. Certainly cheaper than getting a payday loan.

  20. vastrightwing says:

    But you must admit, nothing quite beats the “convenience” checks you get each MONTH from Discover and Visa.

  21. lars2112 says:

    just about every bank does this kind of program, the banks tend to schedule one of these “skip” payments around christmas so you can have the extra cash around the holidays. This is no more reckless than taking out a credit card and paying the min, some times you just need the cash. On a side note, M&T is one of the best consumer banks in the country. While their rates tend to be slightly higher, they treat their customers much better and provide better work out programs for those who fall on hard times.

  22. fever says:

    This can actually be really helpful, in certain situations. The total cost to me was under $30, including the $25 fee. I had just gotten laid off and needed to buy books that my student loan didn’t totally cover, so I took this offer on my car loan. Had it paid off in 6 months, but I probably wouldn’t be where I am now if I had to drop that class.

  23. bonzombiekitty says:

    The bank for my car loan has something like that. If you pay for a year, you can “skip” a payment. Meaning, you still need to send them something like $50 (which is not deducted from your payment), still have to make the payment, the interest still accrues, and there’s other fees associated with it.

    I got bored one day and calculated how much “skipping” a payment costs. For my account, it ends up costing something like an extra $100.

  24. bonzombiekitty says:

    @stinerman: I’m lucky in that I only came out with $20,000 in student loans. That’s not including any loans that my parents took out to help me out – I honestly have no idea how much they took out if any because my dad took care of the financial stuff (I got a bit spoiled there). I know one friend who is close to $100,000 in student loans and she didn’t even go to grad school.

  25. cmp179 says:

    I had a loan from M&T several years ago. I was having trouble making the payments, so I called them to try to work something out. I was only $80 behind, and the woman told me I was eligible to skip one payment without penalty. I thought this was great, so we went through all the details and she took some information from me. I was about to thank her and end the call, and that’s when she told me about the fee (which I think was $30 at the time). Honestly, why would I want to pay $30 to avoid an $80 payment? I wasn’t as assertive then, so I didn’t say anything at the time, but I didn’t pay the fee. I just waited until I had the $80 and paid it.

  26. Fist-o™ says:

    Off-Subject, sort of: I really love it how if I mail an extra check to my student loan lender (Sallie Mae), and I do not label it, “APPLY TO PRINCIPAL”, they take it as an Early Payment, and simply move the due date of my next payment further back. Bastards!

  27. lewisb says:

    I got something similar recently. My town is a federal disaster area after some tornadoes came through around Mother’s Day (my house wasn’t hurt). So my car lender (Nissan Motor Acceptance Corp.) sent one of these offers because they knew times might be tight. As best I could tell, everything was spelled out: they give me a one-month grace period, no extra fee, only additional accrued interest, etc.

    My first impression was that this was scummy, but I couldn’t really come up with a way that it was. They were clear about what they got out of the deal (the additional interest), so anyone who bit would know what they were getting into.

    I didn’t bite, of course.

  28. squatchie44 says:

    I used something like this offer to skip a payment last christmas, the $25 fee was less than what i would have spent on credit card interest for the purchases i made. Worked out ok.

  29. danseuse322 says:

    BofA (I know I know, but they bought my loan, so it wasn’t my fault) does this every few months with a line of credit. They let you pay a $15 reduced fee. Of course that’s it–they don’t actually charge you a fee on top of it. But if I need a break, I pay that immediately and then make sure I cover at least the interest before the next payment is due. But at least it has choice and some control. Paying @4 to defer a $195 payment is stupid.

  30. mndjkc says:

    Am I missing the scam here?

    The statements about the additional interest being “added” simply means that in this case the $200 or so will incur an extra month’s interest. Let’s say that the interest rate on this loan is 6% just to keep the math easy. That’s $12 interest each year or in this case just one dollar for the month.

    Now since the loans is pushed back there will also be additional interest incurred each year remaining on the loan, but I don’t have enough info to figure out what that may be. But there also is a simple solution to that problem.

    Pay off additional principle the next time you can. This will right any changes caused by the deferred payment, and will save you money in the long run.

    I’m sorry but the fee of $25 plus the additional interest of %1 seems like a pretty good option if you’re struggling that month.

    Like many banks out there M&T is probably seeing a rash of defaults on a variety of loans. This may simply be one step in trying to eliminate some of those defaults.

    And $25 for the hour or so of a bank professional’s time it will take to update and recalculate your loan records and payment seems completely reasonable.

    Please someone tell me where I’m wrong on this one?

  31. AmbiUbi says:

    Actually, I’m glad these programs are available…I’m probably going to have to defer a mortgage payment for a month or two when I have my baby in October, since I don’t get any paid maternity leave and I bring home about 3/4 of our income. We’re trying to save as much as possible, but in the case that we can’t, I’m glad to have this option, for all its fees and fine print, rather than have a missed payment on my mortgage history.

  32. whydidnt says:

    This isn’t anything new. I get offers like this from my Credit Union every year at Christmas. Just shows that M&T really isn’t that creative or evil….

  33. buyer5 says:

    Its under the guise of a favor, that’s what makes it silly.

  34. While moving into our new house around christmas, we were short of cash. I didn’t want to take the $355 I could be spending on my kids for christmas on my car payment so I called up my company, and they agreed to set my car payment back a month. They went thru all the legalities with me, said pretty much they just extended my loan that one month, nothing changes. AND no $25 ridiculous fee. WTH is THAT. Most people strapped for cash can just ask their financial institutions for help, if they got a good track record.

  35. ambrooks16 says:

    This is one of the smartest things out there – and is anything but a scam. Sometimes life happens and disasters happen financially for whatever reason. Having a program like this could keep you from getting a house repo’d. It could help you to get out some trouble with credit cards.

    Is it generally a good idea to use the program? Heck no. But there is the situation where this can absolutely save you financially and your credit score.

  36. Coder4Life says:

    state farm does this every summer or holiday season on my car payment. Except it’s $40.

  37. 420greg says:

    I have 3 loans with my CU, 2 cars and a boat, and I do the skip a pay every year around christmas. Since these loans are fixed (installment debt) it makes more sense to send the $1200 to my 17% amex card, rather than pay it to my 4.35% car loan.

    Also once the CC debt is paid off I am going to use this money to make an extra mortgage payment. If you make an extra payment on your mortgage every year you can save almost 40k and pay it off in 22 years 8 months, at least in my case.

  38. bobfromboston says:

    @buyer5: It’s not a favor, but a convenience. If you’ve been hit with medical bills or a huge car repair, and your alternative is defaulting on a $500 loan payment, $25 is a pretty small price to pay.

  39. Tiber says:

    @bonzombiekitty: Heh heh, you want to know bad debt? Check out Full Sail. You get a Bachelor’s Degree in 2 years, but the program is somewhere in the $50,000′s and it’s nearly impossible to get a job (You’ll have 9 A.M. – 5 P.M. classes one month, and 5 P.M. – 1 A.M. in another) so you have to take out loans for living expenses (in Orlando). I don’t regret going there by any means, but I have over $100k in debt, and I was pretty conservative with living expenses.

  40. stinerman says:

    @AmbiUbi:

    Just for the record, I will state that Norway requires 10 months of paid parental leave at 100% of wages or 12.5 months of paid leave at 80% of wages. This is in addition to a full year of unpaid leave for each parent.

    Sometimes I read about the laws in Europe and swear I’m reading fiction.

  41. Joessandwich says:

    My credit union offers this all the time. Although it makes more sense since my credit union is for people in the entertainment industry, where being without work for a month or more is the standard. I’m going on hiatus for five weeks which is unpaid, so it certainly is tempting. But I planned well.

  42. Anonymous says:

    Hey – nothing new – we tried to refi thru M&T Bank and were promised one thing and close to closing (we had already had it appraised exactly a month before they appraised it), they used an appraiser from another county who spent only 20 minutes in our home (almost 4,000 sq ft & approx 2 acres), did not take down any improvements, could not provide us with business card, etc. and she appraised it for $140K less than the previous appraisal. FYI, we were set to close with another bank but M&T promised us a lower rate so we cancelled settlement via first bank. My guess is that they do this alot – tell you one thing and then close to closing, come up with reasons why you have to pay thousands more to them to close. They figure, they got you. M&T Bank and Reza Kion Abadi are showing me how unethical banks can be. Please learn from our experience.