As Consumers’ Debt Burdens Rise, Government Agencies Have Opportunities to Better Assist Them with Key Services
30 April 2024 - 10:00PM
U.S. consumers’ median minimum monthly debt payments grew by 32%
between 2020 and 2023 – surpassing the rate of inflation (18%)
during the same time. As consumer debt obligations continue to
rise, a new TransUnion (NYSE: TRU) public sector study explores
ways government agencies can better assist their constituents.
The study, “Navigate New Consumer Financial Strains: How
Government Agencies Can Strengthen Customer Experiences,” included
both TransUnion consumer credit and Bureau of Labor Statistics data
from December 2020 to December 2023.
“There are a host of economic conditions, like inflation and
higher interest rates, that are making life increasingly difficult
for consumers,” said Jeffrey Huth, senior vice president and head
of TransUnion’s public sector business. “Financial stress can often
lead to constituents needing access to critical government
programs, so it is crucial agencies identify people who are
struggling and reach out with appropriate information and
support.”
While increases to minimum monthly payments are concerning, the
report highlights disparities among several key demographic groups,
based on generation, homeownership and geography.
Minimum monthly debt payment growth from
2020 to 2023
Ages 18 to 29 |
Grew by 74% |
Ages 60+ |
Grew by 11% |
Renters |
Grew by 54% |
Homeowners with mortgages |
Grew by 31% |
Urban |
Grew by 35% |
Rural |
Grew by 25% |
The report identifies three core groups of consumers based on
their financial standing that government agencies must be aware of:
those experiencing hardship, feeling pinched and expecting the
worst. It also includes recommendations for government agencies to
increase and improve outreach, access to services and program
integrity.
Experiencing hardshipThis subset of consumers
utilize existing credit at significantly higher rates compared to
other consumers, suggesting they may be relying on a dwindling
reserve of available credit to make ends meet. The group is also
growing primarily in zip codes with the lowest deciles for median
household income, and is the most in need of services and
support.
“Reducing friction to the enrollment process is one of the most
effective means to delivering aid to more constituents who may not
have the resources and skills necessary to navigate complex
systems,” said Huth.
Agencies can streamline enrollment by leveraging robust identity
and device intelligence, like those enabled via the TruValidate™
solution line. These solutions allow for a friction-right approach
that expedites legitimate online applications and inquiries via the
phone, while protecting agencies against fraud.
Feeling pinchedThis group of consumers contains
those whose debt payment obligations are outpacing inflation and
income growth. While this group is currently able to pay bills and
purchase necessary goods and services, they may be relying more on
credit to do so. These constituents are more likely to need help in
the future due to their potentially precarious position.
The report notes that consumers feeling pinched would likely
benefit from better awareness of available assistance from
government agencies to reduce potential anxiety. Program managers
can leverage marketing solutions, like TransUnion’s TruAudience®
line of solutions, to engage individuals and families most likely
to experience financial hardship.
In addition, phone calls often play a critical role in
conducting outreach and building trust with stakeholders. To
improve call experiences, and minimize robocalls, call spoofing,
and spam mistagging, agencies can leverage outbound call solutions,
like TruContact™ Trusted Call Solutions, to ensure legitimate calls
get through. Branded Call Display (BCD) can also help agencies
improve engagement by enabling them to add their name, logo and
reason for the call to the mobile phone display, so constituents
know and trust who’s calling, and answer the phone.
Expecting the worstSome consumers may be
anticipating a recession. As a result, they are actively paying
down debt, cutting back on discretionary spending and increasing
overall savings. “While this group does not need immediate support,
they still should feel confident in the government’s ability to
effectively deliver services, steward taxpayer dollars and protect
constituents from bad actors posing as government agencies to
commit fraud,” added Huth.
State and Federal programs can better steward resources by
employing identity solutions to verify that people who enroll in
programs are legitimate. They can also mitigate risks to
constituents from imposter scams by registering inbound-only
numbers with Do Not Originate (DNO) services, so calls that aren’t
from the agency can be stopped before they ever get to the
constituent.
“As government agencies seek to increase equity and
accessibility for their programs, they have an opportunity to
improve trust and confidence in the government’s ability to protect
constituents,” said Huth. “Leveraging the right identity and
trusted call solutions can help them meet both objectives
simultaneously."
Click here to read Navigate New Consumer Financial Strains: How
Government Agencies Can Strengthen Customer Experiences.
About TransUnion (NYSE: TRU) TransUnion is a
global information and insights company with over 13,000 associates
operating in more than 30 countries. We make trust possible by
ensuring each person is reliably represented in the marketplace. We
do this with a Tru™ picture of each person: an actionable view of
consumers, stewarded with care. Through our acquisitions and
technology investments we have developed innovative solutions that
extend beyond our strong foundation in core credit into areas such
as marketing, fraud, risk and advanced analytics. As a result,
consumers and businesses can transact with confidence and achieve
great things. We call this Information for Good® — and it leads to
economic opportunity, great experiences and personal empowerment
for millions of people around the
world. http://www.transunion.com/business
Contact |
Dave
Blumberg |
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TransUnion |
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E-mail |
david.blumberg@transunion.com |
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Telephone |
312-972-6646 |
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