Four Holiday Hangover Solutions to Prepare for Financial Relief in the New Year
By Seth Brickman, CEO QCash
November 9, 2023
Are you noticing an uptick in your members’ financial distress as we approach the new year? The holidays put pressure on families to deliver the goods for their loved ones, knowing the bill will come due after the clock strikes January 1. The holiday hangover has struck alright, right in the member’s account where it hurts the most.
And prospects aren’t looking much better for 2024. As economic stresses continue to fluctuate in many parts of the country, consumers continue to overspend when preparing for the holidays, even if they have to take the first five months of the new year to pay up. In fact, according to NerdWallet’s just-released 2023 Holiday Travel Report, three-quarters of holiday travelers (75%) said they planned to use credit cards to pay for at least some of their travel expenses. What’s worse, roughly one in two Americans who put 2022 holiday travel expenses on their credit cards still hadn’t paid them off.
That finding tracks with consumers’ post-holiday plans heading into 2024. More than a third of 2023 holiday travelers (35%) planned to maintain their travel plans regardless of the expense. “More Americans are traveling for the holidays this year than last,” said Sally French, NerdWallet’s travel expert and spokesperson, in late October 2023. “That’s despite higher travel costs and other challenges like lingering debt from last year’s travels and resuming federal student loan repayments cutting into budgets.”
Relying on credit cards isn’t a good thing, especially when members could instead take out a small-dollar loan that actually helps boost their financial standing and wellness goals.
Four Steps to Manage Those Holiday Hangovers in the New Year
Heading into 2024, January is the ideal time to help your members take a hard look at their budgets, debt, and investments, and then cross-check them against their financial goals (if they have them).
These four points offer the perfect chance for your members to reflect on the past year (or two, or three) and set achievable goals, however incremental, for leveling up for 2024 and beyond.
1. Plan (and book!) ahead for holiday travel.
Encourage your members to start planning for their holiday travel earlier in 2024, especially if they are traveling by air. While there can be last-minute deals, it’s more often that holiday trip plans aren’t so flexible, so they might as well book their plans sooner rather than later. Essentially, this allows the member to pay into a holiday travel budget months in advance so their finances don’t take such a hard hit in the new year. According to data from Google Flights, the lowest average price for flights in mid-December are listed around 71 days prior to departure – just over 10 weeks before takeoff.
2. Renegotiate your members’ financial commitments and bills.
Many people put their monthly bills and financial commitments on autopilot and forget all about them. But if your members are scrounging for every dollar during the holiday season, it may be worth an inquiry to those companies or utilities to discuss potential savings, particularly if it’s been awhile since they signed up. While it may take time and effort to contact them all, it may be worth the effort for a less stressful holiday season!
3. Educate your members about ways to conquer their holiday debt.
Even if your credit union member is already experienced at controlling their debt, look for ways to consolidate it even further. For instance, if the member receives a holiday or year-end bonus, speak with them about contributing that extra income to any high-interest balances they’re paying off.
Also encourage the member to consider consolidating their debts to a single loan. Decreasing the number of loans your member carries can help reduce the amount paid in interest each month while streamlining their financial life and softening their financial distress.
4. Offer your members a holiday loan as an alternative to credit cards.
The holiday season can get pretty hectic, to say the least, and all consumers want is the easiest, fastest, most convenient process to get life done. Unfortunately, when it comes to putting together the best holiday, convenience usually comes with putting every holiday-centric purchase on credit cards. The problem is, for members who aren’t able to pay off their monthly statement balances, those purchases only put them into worse debt while further degrading their credit health.
Adding a holiday loan to your portfolio of small-dollar loan offerings can help your members improve their credit scores while teaching them better financial health tactics and realizing better options for building credit instead of inhibiting it through overusing their credit cards.
By paying off a holiday loan on time after the season is over, members demonstrate they are in fact loan-worthy. As they pay down their holiday loan, their credit usage will decrease, leaving them with a higher credit score. Having members continue to pound away on their credit cards month after month, year after year doesn’t accomplish any of those financial health objectives.
If upgrading your digital small-dollar loan product is something you have been considering for 2024, connect with Seth Brickman and QCash to get started on changing your members’ lives.
QCash Financial offers relationship-based small-dollar loans. The CUSO’s lending platform enables credit unions to help their members responsibly when they face financial challenges from unexpected life events. From application to account funding, the process is complete in under 60 seconds, no credit check required, and completely digital, needing no effort from staff. When life happens, be there for your members anytime, anywhere and from any device.
Ready to level-up your members’ experience? Consider Life Event, Specialty, and Financial First Responder Loan programs, all using QCash’s patented relational underwriting.