Credit card issuer Discover reveals that despite available defer payment options, credit card customers are paying their balances.
According to the company, defer payments massively dropped by 90 percent, from April until early June, indicating ease in payment distress. Marketing tracking and analysis company Comperemedia said fewer people deferring card bills create a positive impact on the economy.
Comperemedia’s Andrew Davidson said, “Perhaps they got their stimulus check, perhaps they got unemployment benefits or maybe they even found a job.”
Davidson said paying all credit card balances is better, instead of further delaying the payments. This could affect the financial health of consumers in the long run, especially if the debt is piling up.
“In most instances, interest still accrues, and so consumers are effectively kicking the can down the road,” added Davidson. He also said that low deferring payments could positively impact credit card companies who do not have much cash for a default payment.
Good Customer Relationship
Early March, credit card issuers arrived at a decision to offer assistance to customers who cannot pay their card balances on time. By April, seven out of the 11 banks surveyed said they offered assistance programs on a case-to-case basis.
Lending Tree’s Matt Schulz said banks should maintain a good relationship with customers especially at the time of a pandemic.
“It’s not just about somebody having a credit card, it’s about somebody having a credit card and then potentially being able to upsell them to a mortgage, or a car loan,” said Schulz.
Banks should communicate to customers about cutting some slack and offer extra breathing room, then receive good feedback from customers. After the pandemic, banks can gain loyal customers and attract new ones from word of mouth.
Discover offered to extend relief to customers since March, providing support related to payment timing, fees, and late payments.