During our most recent Loans Baseline study from our Raddon Research Insights program, we uncovered some feelings and attitudes accountholders have about their current debt situation. One group that stood out was the Millennial generation. We noticed that although we still reached record highs in total loan balances in 2024, there has been a slowdown when it comes to that area of banking. The question is, why?

Figure 1: Percentage of consumers who agree or strongly agree that they have taken on too much debt

One-third of households feel they have taken on too much debt over the past two years

Source: Loans Baseline, Raddon Research Insights, 2024

One reason loan activity has slowed down is because of the feeling of taking on too much debt over recent years, especially from Millennials. Equipping your staff to have certain conversations and uncovering the needs of your consumers is key. Once you uncover those stated or even unstated needs, your staff can bring up the products and services you offer, such as potential balance transfers, credit cards or personal loans that may have a lower interest rate than your competitors, debt consolidation loans or even deposit accounts that have higher interest rates so they can save more money to put toward their overwhelming debt. When you utilize conversational skills and get to know your consumers, you are not only helping your accountholders, but also building trust, and that in turn will help with word of mouth and opening more products and services. When they are interested in other loans in the future, they will feel comfortable and safe with your institution.

Figure 2: Percentage of consumers who have had difficulty making on-time payments on current loans/credit cards

Borrowers are having more difficulty making on-time loan payments

Source: Loans Baseline, Raddon Research Insights, 2024

Not only do consumers, especially Millennials, feel they have taken on too much debt over the last two years, many are having difficulty making on-time payments as well. This emphasizes the importance of having those conversations with your accountholders. Feelings of having too much debt, being overwhelmed and stressed, as well as not being able to make payments on time can really impact a person when it comes to their finances. Being unable to make payments on time today will affect accountholders ability to borrow in the future. How are your consumers when it comes to this topic? Are there ways you can help guide them so they can better their current situation and, in turn, their future financial situation?

Key questions that staff can ask accountholders:

1.      What are your financial goals?

2.      Do you have any credit cards elsewhere?

3.      Are you aware that we offer balance transfers/consolidation loans?

4.      Did you know that we have a financial advisor you can meet with?

5.      Are you aware that we currently have a checking/savings account that earns a higher interest rate than the one you currently have? 

Once you get to know your consumers and uncover certain financial needs and goals, it is much easier to match them to a product or service. Helping an accountholder’s current financial situation or specific goals will in turn help with their future ability to borrow as well as their trust in you as a financial institution.