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While consumer loyalty is connected to default, debt consolidation can help with having too many accounts
By Angela Hawke on Jun 23rd, 2010
Banks have faced the prospect of increasing defaults throughout the recession, although a recent study makes a connection between consumer loyalty and accounts that are behind on payment.
According to TransUnion, 1.7 percent of consumers with at least five accounts with a particular bank were at least 30 days late on their credit card payments. As the number of connections decrease between a banking institution and customers, defaults begin to increase.
Consumers with three different lending products from a bank saw a card default rate of 2.1 percent, while those with only one account reported a 2.7 percent chance of being late on payment.
"Although the conventional wisdom has acknowledged the benefits of loyalty for years, this study is a major step in quantifying that benefit and giving lenders the ability to incorporate that insight into lending strategy," Ezra Becker, a director with TransUnion, said.
However, some consumers may find that having too many loans out is making it more difficult for them to pay off what they owe. An option they may consider is debt consolidation, which can reduce the number of statements they receive in the mail.
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