How to support past-due members during the holidays

It’s been a challenging year for U.S. consumers with the continued rising costs, piled on with the reality of student loan payments resuming. 

Despite the ongoing economic pressures, a record 200.4 million consumers shopped over the five-day holiday weekend from Thanksgiving through Cyber Monday, surpassing last year’s record of 196.7 million. The National Retail Federation forecasts that holiday spending is expected to reach record levels and will grow between 3% and 4% over 2022, totalling $957.3 billion to $966.6 billion.

Given that a large number of consumers are using credit to make these purchases, the potential for a surge of past-due accounts post-holiday is high.

As we approach the new year, it's crucial for your credit union to proactively prepare and offer support to your members navigating their debt. Here are some strategies to consider.

Promote Your Credit Union’s Christmas Club To Help Encourage Savings

The holiday season brings a myriad of expenses, from purchasing gifts for loved ones to traveling to visit family. For members without sufficient savings, these expenses often find their way onto credit cards, leading to the burden of paying off credit card debts in the upcoming year, particularly with rising interest rates. 

In fact a recent report showed that of the 52% of consumers that incurred credit card debt from last year’s holiday shopping, 31% still have a credit card balance. 

A Christmas Club is a great tool to help your members as it serves as a dedicated savings account, enabling them to set aside funds throughout the year to cover holiday expenses. Promoting this product to your members can alleviate the financial stress associated with the holiday season.

Share Holiday Shopping Budgeting Tools With Members

The holiday season is a crucial time for budgeting, given the multitude of expenses that can lead to overspending and debt. Support your credit union members by suggesting budgeting tools that can aid them with their post-holiday spending budget. 

Consider setting up an email campaign with extra financial literacy resources tied to money-saving and budgeting topics to help educate your members.

Provide Flexible Payment Plans for Outstanding Debts

Your credit union collections during the holiday season should focus on reducing the pressure on your members. Allow your members to pay their late bills without having to explain their situation to an agent. Implement flexible payment plans that enable members to make manageable payments over an extended period to get them back on track. 

Flexible payment plans allow members to make small payments over a more extended period of time. The flexibility will add a human touch to your debt collection process, preventing undue financial strain on individuals.

Avoid Stressful Debt Collection Calls During Holiday Gatherings 

While there are no specific regulations that say debt collection calls on holidays are illegal, making calls during what is supposed to be a joyous time can significantly impact the member experience negatively.

Utilizing a solution like Lexop empowers your agents to automate and schedule campaigns in advance of their holiday time, ensuring messages are sent at non-disruptive time. Leveraging digital communication methods, which are less intrusive, becomes instrumental in retaining past-due members by fostering a more empathetic, and positive collections experience.

Explore options like automated payment reminders sent through members' preferred channels, such as emails and text messages.

Keep the Spirit of the Season in Mind and Be Empathetic

The holiday season embodies the spirit of giving, and this sentiment should resonate in your approach to collecting late payments. While we're not advocating for a debt waiver, it's crucial to be understanding and work with your members to help them through their financial challenges. 

When engaging with them, prioritize compassion and respect. Express empathy with gentle reminders and ensure that members can choose their preferred payment options.

Support Your Credit Union Member This Holiday Season

From humane credit union collections to helping members budget for their holiday shopping, there are various ways credit unions can support their members during this festive time of year. It's already a stressful economic period, so go the extra mile and show your members that you care. By providing your members with a positive repayment experience you are building trust and loyalty within your credit union community. 

Get more in-depth insights, latest trends in collections strategy for credit unions and guidance on digital transformation delivered right to your inbox. Don't miss out—subscribe below to stay informed.