Debt issues that arose among millennials largely due to the economic crisis of 2008, have been even worsened during the pandemic. According to the
financial report by TranUnion, in Canada, for example, 47% of millennials struggle to pay their credit card bills, followed by 28% of those who need to pay phone bills. Finally, these are individuals who are getting over utility bills – 27% if to be precise.
Meanwhile, the following graph is a typical example of plenty of “post-COVID” concerns, and not only in Canada.
Source: TransUnion Financial Hardship Report — Wave 6
Despite the pandemic, the reasons why it is particularly difficult to collect debts from millennials haven’t changed that much. Yet, it became harder anyway as millennials, as any other group, strive to save more on a rainy day, even if they have past-due
In order to reach them out, you need to know whom you are dealing with to understand how to approach them. So, let’s be consistent by starting with an overview of this consumer group.
Do Millennials Truly Ask for Loans? Defining their Persona
reports that millennials are the people at the age between 25 and 34 who lend around $42,000 on average each. Per the statistics, the highest debt comes from credit cards, followed by student and home loans. Almost half of millennials have 90-days past-due
accounts on one bill at least (according to Experian).
In fact, collecting from millennials is different than that from, say, Gen Z are older population. The point is that you may find it difficult to reach these at the touchpoints you used to use with other age groups. They talk on a smartphone instead of a
landline; it’s because they can’t imagine their daily life without these trendy technologies. Thus, you should not worry about FDCPA or TCPA since those two aren’t an issue in this case anyway.
They are largely influenced by the internet. So, before applying for a loan, they find you on the internet and scan reviews other consumers leave. If they choose you, they will prefer returning the debt online.
You already see that in order to collect debts from millennials, you should be flexible enough to switch to the other medium. Next, we will talk more on this topic.
Best Tips on Debt Collection from Millennials that You Can Follow
Provide “Tech-first” On-demand Solutions
Modern companies and some higher education institutions orient on millennials in providing their loan service, investing hefty sums in
tech solutions and advertising. Perhaps, you are one of them, so our advice for you is to follow the same principle when collecting a debt. Add a chat to your website, follow them up through email – just a couple of methods, but the effect should be tremendous.
At this point, you will establish trust with the consumers and make the collection process faster.
Be a “Debt Collection Counselor” to Them
Alas, most millennials generally lack financial literacy when managing money; perhaps, this is why they have their accounts past-due for considerably continuous periods. A few years ago, BYL Collections reported about less than 20% of millennial consumers
understanding loan options, particularly student ones.
For this lack of understanding of the main financial principles, they are unlikely to follow strict financial plans or fully understand the pros and cons of payment options they are presented with.
As a debt collector, you should provide a financial advice to consumers (in addition to being
diplomatic and wise) to make sure they understand the rules and obligations per loan repayment plan, as well as all the other options they have, to make an informed decision.
Consider Self-service Account Management
74% of millennials reportedly prefer “low-effort,” self-service options such as FAQ sections on websites, virtual assistants, online payment portals, and others. This segment used to communicate online rather than in-person so they prefer keeping control
of their accounts online and solve issues single-handedly and contact support only as an extreme measure.
Track Them Down Wisely
Finding millennials may become a real challenge for you as they use cellphones and are likely to relocate at times. Thus, you should be ahead of the curve here, taking precautionary measure at the moment of the loan application. For example, you may obtain
permission from them to contact them via email, and only to remind them about the debt but also send notifications about discounts and new offers. If email seems not effective enough, you may try finding them on social media.
Understanding the challenges you face when collecting debts from millennials is the first step to the success. Debt negotiation is an integral part of the process, when you not only collect but make sure you are on the same page with them. Again, education
is the key to mutual understanding, so tell them more about your offerings and make sure they know their rights.
Finally, the effect will be positive for all. When applying for loans, millennials will be aware of their payment options, debt collection rules, budgeting, and how to manage their finances. As a result, there will be less chance of them defaulting, that’s
why we strongly advice: work with the millennials, so recovering their past-due accounts won’t be a challenge.