By and large, they're viewed with similar disdain by Americans.

While the Centers for Disease Control and Prevention says 15% of adult Americans smoke, recent Filene research into the borrowing outlook of American consumers shows only 7% of current borrowers feel confident enough to take out more debt in the next six months.

We're not in very good company, it seems.

As a part of Filene's Center for Consumer Decision Making, led by Hope Schau, professor at the University of Arizona, consumers are surveyed every six months to understand their attitudes about borrowing and their outlook for the future.

This survey, along with our work to understand the nuance and implications of “money chatter” across multiple generations, helps paint a picture where most consumers consider debt to be a necessary evil that should be avoided unless necessary, rather than a means to an aspirational end.

Fifty-two percent of survey respondents said they would take on more debt in the next six months only if the need arises; an additional 41% said they would avoid new debt during the same time period at all costs.

Lack of earning power, worry about credit scores and economic conditions were the most significant barriers to borrowing among those surveyed.

A New Messaging Mandate

The survey's results should come as a wake-up call to credit union marketers. Most consumers find debt as something to be avoided if possible and many consumers see debt as a source of stress in their lives.

In fact, 81% of survey respondents indicated that debt is of some concern to them. Twelve percent said it's a major source of daily stress for their family.

For many credit unions, marketing of loan products focuses on aspirational images emblazoned on websites, branch posters and targeted mailings. Families walking out of malls with bags in hand. Couples grinning from ear to ear with the keys to a shiny new car held out proudly.

However, these are not the marketing messages most likely to resonate with members. When debt is equated with stress, these messages may not be realistic. Instead, credit unions should focus on more pragmatic marketing messages to connect with potential borrowers and demonstrate how your loan offerings may reduce stress on the part of members.

The most obvious factor to focus on is rate, particularly if your credit union's rate can be compared to specific competitors or marketplace averages to highlight potential cost savings. Especially in a rising rate environment, as highlighted by the Federal Reserve's March 15 decision to raise the Fed Funds rate by 25 basis points, consumers will increasingly focus on the price of credit and look for more affordable options.

Beyond rate, consider modeling sample savings over the cost of a typical loan in your marketing messages. It can be difficult for the typical consumer to understand what a 1% rate savings compared to the bank across town will mean on a monthly basis.

Using sample loan balances and terms, quantify what the monthly or annual interest savings could be for your loan compared to others. This will require enhanced disclosure copy to demonstrate how these sample savings amounts are calculated, but that's a small hurdle to overcome if you can help your member understand exactly how much they could save by choosing your credit union.

Creating an Impeccable Application Experience

Of course, we know that intent to borrow may not perfectly pair up with the actual borrowing behavior of consumers. People need sudden home repairs, find themselves in cash crunches and get wooed by the spur-of-the-moment excitement of a new car.

This means your credit union must be ready at a moment's notice to fulfill your member's loan need or you may lose that sudden opportunity to a competitor.

Having an online loan application experience that features near-real-time decisioning has become table stakes for financial institutions. Yet, the live observational research we've conducted with credit unions reveals this expectation often goes unmet.

Consider a member who may suddenly find themselves shopping for a new car on a weekend. If they aren't able to quickly and easily apply for, be approved for and ultimately fund a loan without needing to speak with a credit union employee or visit a branch, they are likely to seek out a competitor.

Better yet, help your member avoid much of the need to even apply for a loan by consistently pre-approving members for basic products such as auto loans, credit cards and personal loans. If eligible members know they are pre-approved, then it is much more likely they will seek out your credit union when the sudden need for an unanticipated loan arises.

Once you've built an impeccable application experience, it's critical that you let members know it exists. Again, considering that debt is a key driver of stress for members, any actions your credit union can take to assure the member their loan experience will be stress-free can pay off in the long run.

Be a Part of Each Generation's Money Chatter

It's no surprise that millennials have a language all their own when it comes to discussing finances. Our report, “Millennial Money Chatter: A Guide to Millennial Financial Discourse,” looks at how millennials talk about money online. The research revealed millennial attitudes about debt are generally negative and they use unique terms to characterize these attitudes.

Consider the Twitter hashtag #Debth, which we uncovered in our research. This is probably the most negative metaphor imaginable and illustrates the extent to which young people see financial worries as a barrier to living a fulfilling life.

Once again, it is critical for credit unions to pay attention to the way consumer attitudes are portrayed and then communicate with millennials appropriately. When references to death are used to describe loans, a pragmatic approach to sharing how your credit union's loan products will minimize the worrying effects of debt is best.

But millennials are just one of several generations that credit unions serve, and it's important to know just as much about how Gen X members and baby boomers relate to money. Filene's next wave of research will dive into understanding how these older generations approach finances and will undoubtedly provide insights to help credit unions relate to their needs.

Hopefully there will never come a time where credit union loan products face the same restrictions as cigarette ads. But in the meantime, by understanding the attitudes consumers have about lending products, credit unions can communicate the benefits of loans without causing them to believe they'll be harmful to their health.

Andrew Downin is Managing Director, Research for the Filene Research Institute. He can be reached at 608-661-3746 or andrewd@filene.org.

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