Three Practical Ways Banks Can Help Borrowers Start Repaying Debt

Many consumers understand that they have a debt problem and know that assistance is available. The larger challenge is taking the first step.

A recent SaverLife survey of more than 1,400 low- to moderate-income members found that roughly one-third considered their debt unmanageable. Nearly three-quarters were aware of debt-management resources, yet only a small share used them. Distrust, concerns about fees and uncertainty about where to begin were major barriers.

For banks and credit unions, the findings highlight an important distinction: financial knowledge does not always lead to financial action. Consumers may understand that larger payments could reduce debt faster, but they may fear losing flexibility in their monthly budget. Others may know that credit counseling exists but worry about scams or hidden costs.

Additional calculators, educational materials and repayment tools cannot solve every obstacle. Financial institutions must also design experiences that make the first move feel relevant, manageable and worthwhile.

Key Findings for Financial Institutions

• Seventy-three percent of surveyed participants knew about debt-management resources, but many did not trust them enough to use them.
• SaverLife tested behavioral strategies with more than 100,000 members to identify what encourages people to move from recognizing a debt problem to taking action.
• Consumers often need practical guidance and an easy starting point rather than more general information.
• The most effective strategies make the next step personally relevant, keep the initial action achievable and give consumers a reason to begin.

SaverLife, an app-based nonprofit fintech serving more than 800,000 members, conducted a series of experiments over the past year. The goal was to understand which product designs and messages could help people begin addressing their debt.

1. Make Debt Guidance Personal and Relevant

Generic advice forces consumers to decide which recommendations fit their circumstances. Personalization can reduce that burden and make the path forward easier to understand.

In one test, approximately 1,000 members were invited to complete an artificial intelligence-powered debt assessment. Instead of immediately presenting a standard recommendation, the assessment asked questions about each participant’s financial situation before suggesting possible next steps.

The results showed strong engagement. Eighty-seven percent of participants who began the assessment completed it, while 35% went on to explore additional debt or credit support.

The impact was particularly notable for credit counseling. Participants who received a personalized recommendation to speak with a counselor took that initial step at a rate 10 times higher than the typical rate generated by traditional email outreach.

The lesson is not that every bank must launch an artificial intelligence debt diagnostic. Rather, financial guidance becomes more useful when consumers do not have to determine its relevance on their own. A product that connects personal circumstances with a clear next action can create momentum at the right moment.

Technology allows providers to move beyond simply presenting a list of options. Instead of saying, “Here are several things you could do,” institutions can offer a more direct message: “Based on what you shared, this may be the best place to start.”

This approach can also engage consumers while they are actively thinking about their finances. Even when they are not ready to take immediate action, a personalized experience can help them reflect on their situation and begin considering realistic solutions.

2. Make the First Repayment Step Achievable

The action with the greatest long-term financial benefit is not always the best starting point. For consumers with limited cash flow, a recommendation to make significantly larger debt payments may feel unrealistic or discouraging.

SaverLife tested several messages with 110,000 members. The recommendations included rounding up an existing payment, aligning payment amounts and establishing automatic savings.

The simplest suggestion generated the strongest response. Encouraging members to round up a current debt payment produced 43% more engagement than the other recommendations.

Rounding up a payment by a few dollars provides a concrete and manageable action. It allows consumers to make progress without requiring a major budget overhaul or a large new financial commitment.

For banks and credit unions, this suggests that behavioral feasibility can be as important as mathematical optimization. A small action that a customer will actually take may be more valuable than a theoretically better strategy that feels impossible to maintain.

A modest increase will not eliminate a large balance immediately. However, beginning with a manageable commitment can build confidence, establish a habit and demonstrate that progress is possible. That momentum may eventually encourage larger repayment actions.

3. Make Financial Progress Feel Worthwhile

Consumers often have to balance immediate expenses against long-term financial goals. Even when they want to reduce debt, today’s needs may make it difficult to prioritize additional payments.

A modest incentive can help close that psychological gap by making a positive financial decision feel more immediate and rewarding.

SaverLife explored this strategy through a debt pledge that encouraged members to commit to increasing a monthly loan payment. Participants received a small incentive and recommendations about how much they might add to their repayment.

Twenty percent of participants committed to increasing their loan payment. The average increase was $18. Participants who were already making larger payments were also more likely to commit to a larger additional amount.

Rewards can lower the emotional barrier to getting started, while a manageable pledge can turn an intention into repeatable behavior. For households operating with tight budgets, even small increases in monthly repayments can create meaningful results over time.

Financial institutions do not need to offer large or permanent incentives. The most effective rewards can be targeted and temporary, serving as a prompt that makes a single positive step feel more attainable.

The objective is not to pay consumers every time they make a responsible financial decision. Instead, the goal is to design an experience that helps customers begin a behavior they can continue independently.

Designing the Moment Between Financial Awareness and Action

Consumer debt is not solely an information problem. Many people already recognize that they are struggling and understand that solutions are available. The difficulty is converting awareness into action.

Research from SaverLife shows how behavioral product design can help close that gap. Banks and credit unions can support borrowers by making recommendations more relevant, reducing the friction involved in getting started, building trust and creating clear opportunities to make progress.

The most effective debt-management tools should not simply provide information. They should help consumers identify a practical first move and feel confident enough to take it.

When the initial action is personal, manageable and rewarding, financial institutions have a better opportunity to help troubled borrowers build repayment momentum and improve their long-term financial stability.

About the Author

Mariel Beasley is the head of product and insights at SaverLife, a financial technology nonprofit that helps low- to middle-income households pursue their financial goals. An applied behavioral scientist, Beasley uses data and product design to develop solutions that support financial stability.

Source: Thefinancialbrand.com