3 Ways to Ease Your Cardmembers’ Fear and Doubt Over Debt
Nearly 80% of Americans are in some kind of debt. It isn’t even rare to be in $20,000 or more of debt, especially for people with student loans and homeowners. Regardless, being in debt can be a real point of stress for many, especially in times of economic upheaval. Coronavirus has changed the way that people view their debt and caused a lot of concern over how people who are currently out of work or living on reduced paychecks can continue paying it back.
Below are a few ways that you can begin easing your cardmembers’ fears and doubts surrounding debt right now.
Provide Free Credit Reports
Giving your cardmembers a free credit report allows them to see exactly how their credit is affecting them. In this case, knowledge is power. If you have the ability to partner with a company that provides free credit reporting, it can be a great tool to ease anxiety around debt.
Usually, these tools show debt to income ratios, how a variety of debt factors affect their credit, and give them tips on improving their credit.
While having these reports in front of them doesn’t necessarily do anything about the debt, it paints a clear picture, giving your card members a sense of security and understanding about where their money is and what it’s doing.
Provide Information and Relief When Possible
When international crises like coronavirus strike, people tend to panic over their finances. More people may turn to closing their cards or seeking out debt settlement options. In some cases, these types of actions are the best choices for your cardmembers – but it’s rare and can also affect your lending institution negatively.
Instead, look at what you can do for your cardmembers to help them during these times. Charging off debt obviously isn’t ideal for your cardmembers’ credit scores or your financial institution. Instead of going to this kind of extreme, provide the option to freeze accounts, including payment and accrual of interest.
When you provide options and relief, you should also be providing as much information as possible about each of these options. The more that your cardmembers know, and the more that they see you’re trying to help, the better.
Extoll the Virtues of Credit Counseling
When a cardmember is starting to look at extreme measures, you want them to know that they don’t have to resort to them in order to get on the right path. Sometimes, when people are looking at uncertainty, they don’t immediately look at a situation rationally.
Sitting down and meeting with a credit counselor can do a couple of things for your cardmembers. First, if they are, indeed, in a place where they need help getting their debt under control, the credit counselor can give them the tools they need to create a budget.
If budgeting doesn’t help, credit counselors can draw up a debt management plan (DMP) that will have the most benefit for both the cardmember and the bank.
The bank is less likely to lose money and the cardmember gets to keep their credit score while reducing their debt payments.
If your lending institution is looking for more ways to help cardmembers while streamlining your own processes, Peregrin can help. Give us a call toll free today at 1-800-231-2493 or contact us on the website.