The Hidden Stress Behind Every Loan: What to Know About Today’s Borrowers
By Nicole Volpe, Contributor at The Financial Brand
Simple Subscribe
Subscribe Now!
It’s a split-screen moment for consumer lending. In one frame, unemployment is low and spending remains strong. In the other, household debt is rising and signs of financial strain are mounting. The tension is visible in both economic data and consumer sentiment: New research reveals consumers’ deep concern over potential financial setbacks and their debt burden — fears that echo persistent headlines about inflation, layoffs, and global instability.
At the same time, the long tail of higher interest rates is reshaping financial institution margins. While net interest income benefited initially from rate hikes, that advantage has narrowed as deposit costs catch up and loan growth slows. Credit unions face mounting pressure to diversify revenue across both spread and fee income, including insurance and protection products, advisory services, and payments.
In this environment, the idea that financial institutions must “meet people where they are” matters more than ever. New research by TruStage — a provider of insurance and financial services to credit unions and their members — brings the consumer perspective sharply into focus: Their latest survey shows that members are increasingly concerned about downside scenarios and actively seeking safety nets — tools that can help limit personal financial risk.
For credit unions — whose mission centers on the financial well-being of their members — understanding both the economic data and the psychographic reality is essential. Lending strategies, in particular, must evolve to balance shifting borrower expectations with margin pressure and the need to diversify revenue through products that respond to members’ desire for protection.
An Economic Double-Take
At a glance, the economy appears to be holding up in ways that defy expectations, given still-nagging inflation fears and global trade volatility. Unemployment has remained near historic lows (3.6%–4.0%) since early 2022, and nominal wage growth continues to trend positive year-over-year. Consumer spending, though moderating, remains resilient: personal consumption expenditures rose 6.4% in 2023, according to latest data from the Bureau of Economic Analysis. For credit unions, these signals point to a reasonably stable lending environment.
But top-line indicators mask growing strain beneath the surface, particularly among borrowers living closer to the financial edge. Revolving credit balances have surged from $950 billion in Q2 2020 to over $1.3 trillion by mid-2024, according to Federal Reserve data. More cardholders are carrying month-to-month balances, and the average APR on new credit card offers has climbed above 21%, according to LendingTree. Meanwhile, delinquencies are rising. The New York Fed’s Q1 2025 Household Debt and Credit Report shows increasing delinquency rates in credit cards and auto loans — especially among borrowers under 40 and those with subprime scores.
Growing unease about the job market adds to the pressure. By the end of May 2025, U.S. employers had announced more than 696,000 job cuts, an 80% increase over the same period in 2024, according to Challenger, Gray & Christmas. And the disruption may be just beginning. The World Economic Forum’s 2025 Future of Jobs Report forecasts the displacement of 92 million jobs globally by 2030, even as new roles are created — fueling a climate of both economic opportunity and personal anxiety.
The Worry Under the Surface
The research from TruStage offers a more detailed view of how borrowers are assessing risk and making credit decisions in today’s environment.
In a March 2025 survey of more than 1,000 consumers, 91% said they were concerned about their ability to make loan payments if faced with a disruptive life event, such as job loss or the death of a family member, according to TruStage’s 2025 Consumer Lending Preferences Research, March 2025. At the same time, most respondents continue to view their credit union as a source of support for achieving life goals, and many recognize the value of financing tools — such as payment protection and debt consolidation — in helping them navigate uncertainty and move forward.
These concerns reflect a shift in baseline borrower psychology, with personal vulnerability now seen as a highly likely circumstance. “Consumer concern about financial disruption is both rising and broadening,” said Corrin Maier, Vice President, Lending Payment Protection at TruStage. “They’re focused on a wide range of what-if scenarios that could affect their ability to keep up with loan payments.”
Since 2023, consumer concern about the impact of job loss on loan repayment has increased by 23 percentage points, with over half of consumers being concerned about job loss. Fears related to serious illness, vehicle damage, and natural disasters have each risen by 21 points. On average, members now identify nearly six different life events that could jeopardize their financial stability, according to TruStage’s 2025 Consumer Lending Preferences Research, March 2025.
Maier also emphasized the range of people who share this concern, noting that many members feeling this stress haven’t themselves previously experienced financial hardship. While 91% expressed concern about a future disruption, only 73% reported that they’d previously faced at least one significant financial setback, according to TruStage. “We’re seeing more people who haven’t even experienced unemployment, for example, saying they’re worried about it,” Maier said. “The idea that hardship could come at any moment has become truly widespread.”
Most members still expect to borrow in the near term — to manage debt, build credit, or cover large expenses. But the posture is more cautious. Survey responses suggest borrowers remain engaged but more deliberate: less focused on whether to borrow, and more focused on how credit products will perform if their circumstances change. “There’s this combination of worry and hope,” Maier said. “But they still see borrowing as a way forward.”
Insight in Action
Credit unions already have tools at their disposal. Payment protection, credit insurance, mechanical repair coverage, and debt consolidation options are designed to help borrowers manage the financial impact of job loss, medical issues, and other disruptive events — the very risks members are most concerned about. When clearly understood, these products can strengthen member relationships while adding fee income and helping manage institutional risk.
But many members don’t know these safeguards exist. Nearly half of respondents in the TruStage survey said they don’t recall ever being informed of protections that could help in a crisis, TruStage’s research finds. In uncertain times, that disconnect has a dual impact: Credit unions may miss the chance to offer relevant, high-value solutions and members may be less likely to borrow.
In this light, credit unions benefit when they offer protection products in the context of the overall borrowing experience — something that’s easier for institutions to control and achieve online than with a rep. Maier says: “It has to feel like part of the member’s financial plan, not an afterthought.”
TruStage is the marketing name for TruStage Financial Group, Inc. its subsidiaries and affiliates. Corporate headquarters are located in Madison, Wis.
