The economy took a wild ride in 2022, and with interest rates continuing to rise, inflation expected to remain relatively high and household savings dwindling, 2023 could be “just as challenging,” according to an update from TrueAccord.
As consumers battle high inflation and interest rates to afford necessities, budgets “will be stretched and many will have to prioritize when and where they spend,” the team at TrueAccord wrote in a blog post.
Unsurprisingly, paying off debt will “likely take a back seat to food, housing and transportation needs. But what will that mean for lenders and creditors?”
The report from TrueAccord also noted that in order “to construct a comprehensive picture of the financial landscape for consumers with debt in delinquency, they analyzed data of thousands of consumers in debt collection to explore how they are positioned to handle financial stressors as well as how different financial burdens impact the repayment ability of consumers in debt collection, especially for those with student loans in this tumultuous economy.”
Key Takeaways from the Report:
- Economic indicators show a rough road ahead for consumers
- Resumed student loan payments will impact ability to pay debts – consumers with student loans have an average of $11,373 in non-student loan debt, or 92% more than consumers without student loans ($5,917)
- Student loan holders increased their average number of open trade lines by 10.3% since 2020, while open trade lines decreased by 7.7% for non-student loan holders
- Consumers with student loans have an average of $811 more in auto loan debt than those without student loans as of 2022
- Engaging consumers with multiple debts requires understanding, personalization and patience in 2023
For more details on this update, including the full report, check here.
As covered in January 2023, TrueAccord noted that when it comes to New Year’s resolutions, improving personal finances “isn’t anything new.”
But as we look ahead to 2023, TrueAccord reveals that they “see more and more Americans adding serious financial goals to their list.” A recent Ascent survey “found 66% of Americans plan on making a financial resolution.”
According to TrueAccord, your business should “be paying attention to the New Year goals of consumers: it’s the ideal time to support your customers to pay off debt (one of the most common financial resolutions for 2023) by meeting them where they are—with the right message, right channel, and right time.”
As noted in a blog post, financial resolutions “aren’t new, but the number of Americans making them is rising (which might have something to do with rising delinquency rates).”
For 2022, it is “estimated that more than 92 million Americans made financial new year’s resolutions, compared to only 60 million who reported making a financial resolution in 2021.”
And surveys “found that 41% of respondents expressed a strong desire to prioritize paying down debt in 2022—a trend that will continue into 2023 for good reason.”