From Summer Vacations to Back-to-School, Consumer Debt is Rolling Over—Catch Customers Before Deeper Delinquency
Summer is officially slipping into the back-to-school season for families and young adults across America—but consumer debt isn’t going anywhere any time soon. From over-extending on vacations to going over-budget on school supplies, consumers continue to feel the strain of higher interest rates and inflation. And then before we know it, Q4 will arrive with the onslaught of holiday shopping adding to Americans’ financial juggle.
Before consumers start spending on holiday wish-lists, businesses need to take this opportunity to engage past-due customers before they roll into further delinquency.
Let’s take a look at the numbers behind summer debt, adding on back-to-school costs, and how to communicate with delinquent consumers before Q4.
Summer Fun Comes at a Cost
Consumers were already struggling before this summer even started, with surveys finding that 46% of Americans are still paying off last summer’s credit card debt. These lingering balances are causing great stress for almost 25% of respondents—not just about post-summer break bills but about their credit card debt in general, with nearly half saying they carry debt on cards from everyday purchases. Considering inflation and interest rates, it’s not surprising that nearly 1 in 3 Americans skipped summer vacation this year because they cannot afford it.
But that isn’t slowing down a good portion of the population: despite 80% of respondents prioritizing paying down their credit card debt, 36% are willing to go into debt to pay for summer travel and vacations. These travelers plan to cover the cost of summer fun using credit cards, buy-now-pay-later (BNPL) services, personal loans, and loans from family or friends.
Taking an even closer look at a popular family summer destination, 45% of parents take on debt for Disney vacations with 75% of respondents said that their Disney trip did or would take up to six months to pay off—and despite accumulating debt, 59% of parents expressed no regrets over stretching their budgets on a Disney vacation.
And it’s not just traditional family trips that had consumers saying YOLO this summer. Surveys found that 27% of Gen Z and 28% of millennials are willing to take on debt in order to have a fun summer with an average of six in 10 Gen Zers and millennials planning summer travel—and a whopping 42% of Gen Z and 47% of millennials are willing to go into debt to get it done.
But now families—and students of all ages—are facing another round of expenses…
The Price-Tags Associated with Back-to-School Shopping
For many Americans, it’s time to swap the sunscreen for school supplies, which comes with its own set of increasing costs. But it’s no surprise that 77% of parents are willing to go into debt for their child's education, even if 86% of parents think the cost of education is out of control.
Over half of parents surveyed expect to pay more for back-to-school shopping this year than last year and 79% believe that schools ask them to buy too much for the back-to-school season. College students and their families are also expecting to spend more, spending on average $1,364.75 for back-to-school.
It’s not shocking that 73% of back-to-school shoppers are stressed about paying for supplies and looking for ways to save—even if it means taking on debt in the long run: 29% of parents surveyed plan to apply for a new credit card, and 20% of parents plan on using BNPLs as part of their shopping strategy.
While summer spending may be sliding into back-to-school, Q4 holds even more pressure for consumers to spend even if they’re already carrying debt. So before holiday shopping gets into full swing, it’s critical for businesses to reach customers now in effort to recoup overdue funds before they’re allocated elsewhere.
Start Engaging Consumers Before Q4
Consumers already know it: nearly 1 in 3 people anticipate having more credit card debt by the end of the year. And among card users who carry a balance, more than half have that debt for more than a year. Breaking the survey data down further, 19% of respondents report they had it for one to two years, 11% for two to three years, 11% for three to five years, and 17% for five years or more.
Don’t let your customers slip into these statistics—start engaging through their preferred channels at times most convenient for them through intelligent digital communications. In times like these when you need to engage customers before they reach collections, Retain by TrueML Products automates your communications to help you recover more while reducing your costs.
Just like we’ve recommended to get your digital communication strategy in place before tax season—a time when 44% of Americans reported earmarking their refunds to pay off their debt—engaging your customers is imperative to try to recoup debt before the holiday spending sprees commence. Despite 68% of Americans reporting they pay more attention to emails from companies during the holidays, business surveys expect 67% marketing fatigue by November 1st and 81% anticipate burnout by December.
So get a jump on customer communication for better engagement, reduce roll rates, and recover more faster with Retain. Discover how Retain helps improve your digital customer engagement all year round by scheduling a consultation today»»