Encore Capital Group Economic Freedom Study

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Encore Capital Group has released its first Economic Freedom Study, which details how consumers feel about their financial situation, as well as the economy in general, in the US and UK. The survey covered 2,600 people in the US and UK, with 300 low-income respondents in each location.

General Highlights:

  • 57% of people surveyed in the United States still feel positive about their personal financial future.
  • 33% of respondents in the United States ranked credit card debt as their main source of stress.
  • 32% of low-income US respondents ranked medical debt as the most stressful.

Pandemic changes:

  • 69% of people polled in the United States said that before the pandemic, their feeling about their financial future was positive. 57% said they felt positive about their financial future in August 2021.
  • For low-income respondents, the numbers are similar. 62% reported positive sentiment before the pandemic, and 51% still felt positive in August 2021.
  • 42% of respondents in the United States said they feel the future of the economy in general is worse than it was in August 2020.
  • In early 2021, consumer credit scores in the United States hit record highs due to consumers using stimulus funds to pay off debts.
  • However, today, 50% of Americans surveyed say they are more in debt than before the start of the pandemic.

Financial objectives and challenges:

  • 64% of people in the United States consider an emergency fund to be their main financial goal, 47% of people in the United States say eliminating debt is their main financial goal.
  • 53% of people surveyed in the United States believe that receiving incentives for good financial habits would help them reach their financial goals.
  • 61% of people in the United States believe they can reduce their debt in the years to come, with most (56%) planning to pay off their debt in small increments over time.
  • Most respondents in the US (58% and 57% respectively) believe that suspending repayment due to hardship and having more time to repay their debt would be helpful in reducing / eliminating their debt.

Ethical collections:

  • 40% of respondents in the United States believe that for a collection agency to be considered ethical, it should offer debt relief.
  • Far fewer US respondents (15%) think social responsibility is important.

InsideARM perspective: While 2020 was a banner year for many collection agencies due to consumers paying their past due debts with stimulus money, 2021 has not been so rich. Consumer spending fell in 2020, which means fewer account placements with agencies. However, as the report states, we can probably expect an increase in investments in 2022, as 50% of U.S. respondents report having more outstanding debt than before the pandemic.

Consumers are also clear about what they are looking for in ethical collections companies. While there are concerns about data privacy, consumers are clearly looking for collection agencies to offer flexible payment options and consistent stringency policies. As the number of counts increases, it will be important to keep this in mind.


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