Credit card debt is the third leading cause of debt collection complaints according to Consumer Financial Protection Bureau. This is concerning for lenders as more complaints indicate delayed debt recovery. It could lead to reduced fund inflow which negatively impacts your financial cycle. With effective solutions, you can speed up your collections, improve your name, and offer a space for fewer consumer complaints and enhanced customer retention.
Here are five proven solutions on how to settle credit card debt.
Opt for a Lump-Sum Settlement
The borrower makes a lump-sum payment in one go but receives a relaxation in the amount. Instead of paying the full sum, the lender permits the debtor to close the deal by submitting only a ‘lump’ or chunk of it. The advantage is the speed: faster cash recoveries are sometimes more advantageous than prolonged recoveries. This means that there will be more closed accounts which is beneficial for the lender’s portfolio. Similar to installment plans, predictability is a feature of lump-sum settlement. This will enable lenders to plan their subsequent financial activities. Furthermore, the recovered money raises the lender’s liquidity which can be immediately invested in new customers, thereby augmenting the lender’s selling power.
Offer Financial Counseling to Reduce Further Dues
Lack of fiscal knowledge is often a reason why several credit card users drown in credit balance. Assigning an expert in financial knowledge to debtors can help in bringing balance to their credit scores. Once you can establish open communication with your debtor about their unfulfilled payments, you can counsel them about the mishaps of further credit card dues. The counseling also involves advising the debtors about the repercussions of overspending, inability to make savings, weak debt management, investment mistakes, and more. Many consumers become more financially responsible after a warning and an awareness session and will be conscious of being more careful with their credit card usage.
Consider Payment Deferrals
Payment deferrals allow the borrower to pause payments and push them to the end of the loan’s term. If the debtor cannot pay immediately, two or three payments can be delayed and added to the remaining balance at the end. This flexibility is less taxing for the borrower. Also, there are no late fees or impact or negative impact on the credit score. Altogether, the borrower has better chances to quickly resolve the debt and return recoveries to the lender. Deferrals prevent defaulting which is good for the lender’s brand name.
Switch to Omnichannel Communication Approach
A time of credit deficit calls for fast plans of action. For quick and easy communication with your debtor, omnichannel customer service is a beneficial solution. In today’s digitalized world, traditional call center collection methods are insufficient. Offering a user-friendly approach through channels like email, chatbots, SMS, voice, and video calls, omnichannel communication ensures customers receive timely reminders and consistent updates on their credit card debt.
Outsourcing to Third Party Debt Collection Agency
First-party collections are helpful during the early stages prior to borrowers becoming delinquent or just after. This service consists of sending reminders to borrowers to pay the dues on time to prevent late fees or defaulting.
Utilizing a third-party collection agency is a late intervention tactic after the loan has been charged off. Businesses choose to utilize a third-party agency for this service because they find it difficult to steer through the complicated web of credit collection laws. Outsourcing collections to a third-party agency is a smart, cost-effective choice that accelerates debt recovery. It allows businesses to confidently offload the burden, knowing that experienced agents bring the necessary expertise, advanced technology, and scalability to the process.
Why Choose FCS to Settle Credit Card Debt
FCS is a nationally licensed BPO company that specializes in both digital debt collection and first party pre-collections. With more than three decades of experience in debt recovery services and customer service outsourcing, we offer you expert guidance and personalized service. We train our agents to effectively engage in conversations with consumers to yield the most beneficial results for our clients while upholding their reputation. Our omnichannel connection platform and machine learning engine are coded to tailor interactions based on the consumer, their preferred medium, and the ideal time.
Get in touch with FCS to boost your credit recovery rates today!
