How credit unions can improve consumer loan repayment performance
- Increasing delinquency rates offer a glimpse into the declining financial well-being of consumers throughout 2023 and raise red flags about future upticks in charge-offs.
- How can lenders, particularly credit unions, support consumers in managing debt and averting delinquencies and loan defaults in the future?
Approximately 2.53% of consumer loans held by commercial banks in the US were reported as delinquent in the third quarter of 2023. While this delinquency rate had previously declined from its peak of 2.47% in the first quarter of 2020, it has since resumed an upward trend beginning in 2021. 
The recent sharp increase offers a glimpse into the declining financial well-being of consumers throughout 2023 and also raises red flags about future upticks in delinquencies and charge-offs. While eliminating debt remains a primary financial objective for consumers in 2024, recent findings from Happy Money highlight making loan repayment a priority, beginning with credit card debt that has soared past a trillion dollars in 2023.
Happy Money is a fintech lender that works with credit unions (CUs) like federally chartered USALLIANCE Financial and Illinois state-chartered Alliant to provide personal loans for debt consolidation, specifically targeting high-interest credit card debts.
Many consumers are already limiting their use of traditional card-based payments and opting for emerging alternatives like Pay by Bank. But how can credit unions and lenders further support consumers in managing debt and averting delinquencies and loan defaults in the future?
