Consumers are taking an increasing number of payday loans out, buy-now, pay-later is trendy and credit card borrowers paid down just 24% of what they did during the same period last year. The government has quit sending out big COVID checks and has failed to deal with inflation swiftly, so consumers are facing skyrocketing costs on life’s basics, like food and gas for their cars. 

Who gives a S#!t?! You do. Credit unions do. Your communities do.

Overdrafts Could Be Worse Than Payday Lending

While a handful of credit unions have determined to eliminate, reduce or restructure their overdraft fees – following rather than leading the big banks – most have not. In fact, as GreenProfit Solutions CEO Joe Winn pointed out in Credit Union Times, 44% of credit unions would shut down without overdraft fee income. Adjustments can be made, but some credit unions cannot afford to shut off this spigot. 

But how does this chart from Moebs Services make credit unions look when compared with the payday lenders? We know about the problems with rollovers that make the payday lenders potentially much worse; regardless, this ain’t good. Not for perception or reality. 

Who gives a S#!t?! You do. Credit unions do. Your communities do.

The (Income) Streams Are Crossed

Nearly two-thirds of Americans are living paycheck-to-paycheck, “making it the main financial lifestyle in the U.S.,” according to LendingClub and PYMNTS.com. I specifically chose that last quote because it hit me hard. Most people in the U.S. need help managing the little they have or making smarter financial decisions about their income. People making more than $250K living paycheck-to-paycheck increased to 38.7%. This isn’t a poor thing, or even a poor credit score thing: It’s a people thing. And credit unions are people helping people.

So, who gives a S#!t?! You do. Credit unions do. Your communities do.

BNPL Sprinkling on Cards’ Reign

Millennials and Gen Z have higher levels of satisfaction with most payment types versus veteran consumers, although they admit to a lower level of understanding about payments. A recent J.D. Power study found they also make less good financial decisions. Keep in mind, many of these young adults (and older ones, too!) think they have a grasp on payments, but we don’t know what we don’t know. I suspect the numbers could be much higher for those lacking understanding.

Thus, younger consumers are turning to buy-now, pay-later options and a quarter of them are using their credit cards to pay on their BNPL purchases. J.D. Power concluded, “The simplicity of the interface combined with the immediate gratification these digital payments solutions provide is creating a potentially dangerous illusion that many purchases are either without cost or something to worry about later. This phenomenon exposes a longer term need for consumer education and financial advice accompanying the growth of new payment options.”

Who gives a S#!t?! You do. Credit unions do. Your communities do.

Financial Shot in the Arm

In the U.S., 41% of consumers have medical debt. Of those who owe, 42% owe $1k-$5k, while 24% carry even more debt. And some may not be captured in the data because of how they handle their debt, playing credit card roulette or pawn shops. In addition, 48% of these debtors say they’ve already burned through their savings and are putting the bills on credit cards, while 1 in 7 claim they’ve been denied necessary medical treatment for lack of payment. Those with medical debt are not only racking up current debts, but because they’re twice as likely to skip care, they’re more likely to increase their medical financial burden down the road. These debts ruin credit scores and late payments on other bills.

Who gives a S#!t?! You do. Credit unions do. Your communities do.

Money and Mental Health

Nearly everyone says financial stress affects their mental health, Credit Union Times reported. Employees cite financial stress more frequently than all other stressors combined. In fact, a recent survey by the National Financial Educators Council found just 55% of American adults believe they will achieve financial independence. The lack of optimism alone is depressing, not to mention the lack of counseling and confidence. Be a HERO – Helping Everyone Reach Opportunities – by getting your credit union team trained to better serve your members during this unprecedented time. Check out CU Strategic Planning’s HERO program.

And, in caring for our members, we cannot lose sight of our employees. 

The $515 million Town & Country FCU in Scarborough, Maine, recently partnered with UNUM Behavioral Health to offer its team members and immediate family 18 and older free access to mental health and wellness solutions, programs and resources, as reported in CU Today. The plan is open to all employees, whether they use the credit unions’ health insurance or not.

“The first barrier I would always get to was: 'I can't afford it.' And that's really sad if somebody needs help and can't afford it,” HR Manager Betsy St. Pierre said, as reported in the credit union trade publication. “We're getting the tools in their hands that they need to manage their mental health on their own.”

This credit union is sizeable, but not huge. It saw a need among its team members and partnered with another community-based organization to make it happen. For a not-for-profit, collaborative industry, we don’t partner nearly as much as we could to leverage that differentiator. 

Wave Your Pride

More than a quarter, 28%, of LGBTQ youth are homeless. That, compounded by 2-4X the odds of depression, anxiety, suicidal thoughts and attempts, plus a host of other issues, is sometimes the price levied for coming out as LGBTQ. 

In response, Kinecta FCU VP of HR and Talent Development Kim Graham explained during a CU Pride Month webinar that the credit union partnered with Covenant House, which provides shelter, food, immediate crisis care, and other services to homeless and runaway youth with the goal of an independent adulthood. Learn more about CU Pride and its efforts to promote the visibility and voice of the LGBTQ community within credit unions, while fostering inclusivity and education. Learn more about CU Pride here and watch June’s Leadership Conference here!

Because it’s not just about homeless youth or people who may be remote from your experience. We have a tremendous group of LGBTQ professionals and volunteers in credit unions. One shared their experience running up against HR at the credit union they used to work at which caused them to leave credit union employment. Without open minded acceptance, in actions and policy, how can we possibly expect to remain relevant to our members?

But who gives a S#!t?! You do. Credit unions do. Your communities do. I do.