The financial services industry is continuously evolving, and it is essential to optimize collections strategies to maintain liquidity and minimize risk. One of the most critical choices for credit un...
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These days, we consistently hear about how strong the U.S. economy is, with home values quickly increasing and low unemployment creating lucrative opportunities for workers. Despite that, many Americans are struggling financially and are unprepared not only to reach far-off goals like retirement but even to cover standard life expenses and debt management. According to a new study from Bankrate, almost 25% of adults have no money saved to cover expenses after a job loss or other emergency, and a quarter of millennials have no emergency savings of any sort. This lack of rainy-day savings is leading to record levels of household debt. The Federal Reserve Bank of New York noted that household debt increased by $114 billion in just the second quarter last year.
It's clear many of your customers need financial guidance and advice. Luckily, your financial institution is in a great position to ;provide that assistance! Offering customers help with managing debt makes your financial institution stand out in a crowded marketplace. Especially as more and more electronic competitors and budgeting or money transfer apps attempt to lure your customers away, outstanding service and showing customers you care about their future will make customers remember your institution in a positive way and wish to deepen their relationship with you.
Since it's pretty hard for human beings to change behavior if they don't understand the topic of discussion, financial education is the real key to successful debt management. Investing time and effort into providing customers with necessary financial education and knowledge is an investment in stronger relationships with your institution's customers.
Offer and Promote Educational Sessions
Unfortunately, it's easy to get in over one's head in debt because there are so many types of debt readily available. Taking all of the different areas into consideration, you can easily offer a number of educational sessions covering the individual debt topics. You can position your institution as the guide that can help your customers navigate the tricky waters of personal finance and debt management, while empowering them to take control of their financial future. Be sure to include how your financial institution offers solutions to help in each of these areas! Here are 10 topics related to debt management that your customers will find valuable.
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Building credit
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Credit score basics, including benefits of higher scores and how to report errors
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Preventing and correcting identity theft, including programs offered by your financial institution
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Selecting, managing, and repaying student loan debt
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How interest is accrued
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Responsible use of credit and minimizing credit card risk
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Protections provided by your financial institution's credit cards (travel insurance, purchase protection, etc.)
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Building an emergency fund to help prevent future credit card debt
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Lower-cost alternatives to payday loans
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Tips for auto and home loan financing, including manageable maximum purchase prices
In a market that grows more competitive by the day, it's imperative to stand out in the crowd and provide customers with memorable services. Educating customers on debt, alternatives to new debt, and ways to manage and pay down existing debt will strengthen your financial institution's position as a caring, knowledgeable partner.
When your institution's accounts are in need of collections, read our free ebook for the pros and cons of outsourcing.
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