Financial Counseling Curbs Loan Losses, Helps Members

Members are desperately seeking help to deal with debt.

October 27, 2010

Offering phone-based financial counseling helps credit unions reduce loan losses while helping members deal with debt, according to a new case study from CUNA Strategic Services and Accel Members Financial Counseling.

“Finding Hope with a Phone Call” studies the experiences of four credit unions that use telephone-based services provided by Accel:

  • DuPage Credit Union, Naperville, Ill. ($272 million in assets);
  • Genisys Credit Union, Auburn Hills, Mich. ($1.35 billion in assets);
  • SECU, Linthicum, Md., ($2.2 billion in assets); and
  • Wanigas Credit Union, Saginaw, Mich. ($230 million in assets).

Subscribe to Credit Union MagazineThe case study reveals that:

Members are desperately seeking help to deal with debt. Case study participants say that more than half of members who contact Accel are seeking debt management plans. Other debt and budget issues account for more than one-fifth of calls.

Debt management plans pay off. Wanigas Credit Union has received $74,000 from members through debt management plans since 2007, when it began offering Accel services. As of mid-2010, Wanigas members were making payments on another $93,069 in debt.

Link members to help before they lose hope. Participating credit unions say telephone access is vital so members can seek help six days a week, including evenings.

Staff referrals motivate members. Staff referrals accounted for roughly half of calls made by DuPage and SECU members. Word-of-mouth recommendations also contribute, prompting 14% of Wanigas members’ calls to Accel.

Improving members’ financial practices helps them qualify for more services.

Offering budgeting and credit score education helps members adopt better financial practices so they can successfully apply for mortgages and other products.

The case study also includes best practices for increasing the impact of telephone-based financial counseling.

Case study participants recommend these best practices to increase Accel’s impact:

  • Educate staff about how and when to refer members for counseling;
  • Promote financial counseling as a member benefit;
  • Build counseling referrals into annual goals for branch managers, collection specialists, loan officers, and other staff who have frequent contact with members;
  • Refer members who fail to qualify for loans to a financial counseling provider;
  • Measure results;
  • Promote counseling services to boost member participation, decrease loan losses, and provide alternatives to bankruptcy; and
  • Use counseling to help troubled employees.

Accel is a division of GreenPath Debt Solutions, which is based in Farmington Hills, Mich. It’s a CUNA Strategic Services alliance provider.