Credit Concerns Not Limited to Mortgages
Online Resources Corp. has released results of a recent survey of U.S. households
and billers regarding the effect of the current mortgage crisis on bill payment and collection patterns. According to ORCC, the survey shows that fallout from the mortgage sector is spilling over into the broader economy, impacting companies across industries and their ability to collect payments.
The survey of more than 1,000 nationally representative U.S. households finds that Americans are increasingly being forced to prioritize among their bills by creating a “delinquency budget” to determine which bills get paid. While the mortgage bill tends to be the one that households are most likely to pay, businesses across other industries are facing a decreasing share of that delinquency budget. Specific findings include:
- One out of four households report being delinquent on at least one bill, by 30 days or more
- If forced to chose between which bills to pay, 98 percent of households would likely pay their mortgage first
- Credit card, phone, healthcare, utility and loan payments are among the groups of bills that are least likely to be paid.
Online Resources also surveyed a cross-section of clients from its 2000+ strong biller end-point network of banks, credit unions, utilities, healthcare companies, card issuers, receivables management and mortgage companies. A majority of the respondents (across all industries with annual revenues ranging from less than $1 million to more than $20 billion), reported feeling a negative impact from the consumer credit crunch already. Only two percent expect it to be easier to collect payments in 2008, and 84 percent expect to spend more on collections in 2008.
A key finding of both surveys is that billers are out of sync with how consumers would prefer to resolve their delinquencies. The majority of consumers prefer the web channel for making delinquent payments, due to its convenient and non-confrontational nature. However, only eight percent of billers offer online collections services that go beyond accepting payments that would allow consumers to resolve their delinquency.
Prior Online Resources studies show that the web channel is highly effective in increasing collections and in engaging otherwise unreachable delinquent account holders. Production results from a top three U.S. card issuer’s use of the web channel delivered annual savings of over $3 million for each $50 million of delinquent debt. In addition, a significant number of late stage delinquent account holders that were previously unreachable by phone accessed the collections website and made payments on their accounts.
Stumble It!
I have personally spoken with several clients recently that echo the same results that you mention in this article. many consumers are faced each month with deciding which bills get paid and which bills get delayed. Unfortunitley this trend is going to continue to worsen in 2008. The only good potential upcome from this is that consumer awareness is now on the rise about the importance of living with in ones means and paying off debt. This lesson has and will come at a price though.
Posted by: Mark Bustamonte | December 29, 2007 at 12:34 AM