Click, Call, or Card: How Distressed Consumers Prefer to Pay Their Debts

For decades, debt repayment followed a relatively predictable pattern. Consumers mailed checks, called payment centers, or visited physical locations to make payments. Today, repayment behavior is far more fragmented. A consumer may pay a credit card bill through a banking app, send money through a mobile wallet, authorize an ACH payment online, use a debit card through a self-service portal, or still choose to pay with cash.

The challenge for creditors is that distressed consumers do not all behave the same way. The payment method that feels easiest and most trustworthy to one borrower may create friction for another.

Research from the Federal Reserve’s payment studies shows that consumers continue shifting toward digital payment methods, but the shift is not uniform across all demographic groups. 

Consumers can make a payment, but is it matching their preferred payment experience? 

The Modern Consumer Payment Landscape

The Federal Reserve’s 2025 Diary of Consumer Payment Choice found that consumers made an average of 48 payments per month in 2024. Credit cards accounted for 35% of payments, debit cards represented 30%, and cash still accounted for 14% of all payments. Cash remained the third most-used payment instrument in the United States.

At the same time, mobile payment usage continued growing rapidly. Consumers made an average of 11 payments per month using mobile phones, nearly triple the level observed in 2018. Remote payments also continued increasing, reflecting consumers’ growing comfort with digital financial interactions.

These trends matter because collections increasingly occur in digital environments. Consumers who routinely pay bills through apps, digital wallets, and online banking platforms may view traditional payment channels as unnecessary friction.

A payment method often reflects how consumers organize their financial lives.

Why Payment Preference Matters in Collections

In collections, engagement alone does not guarantee payment.

A consumer may answer a call and agree to make a payment, only to abandon the process if the payment experience is inconvenient. Similarly, a consumer who ignores collection calls may still complete a payment immediately if a text message contains a secure payment link connected to their preferred payment method.

The gap between willingness and execution is often where collections performance is won or lost.

When consumers encounter friction during repayment, the likelihood of abandonment increases. Multiple login screens, lengthy payment forms, limited payment options, or channel switching requirements can all reduce completion rates.

In contrast, payment flows that align with existing consumer behavior reduce effort and increase the probability of successful repayment.

The Rise of Card-Based Payments

Credit and debit cards remain the dominant payment instruments in the United States.

According to the Federal Reserve’s payment research, card payments account for the majority of consumer transactions, with credit cards leading overall payment volume. Findings from the Survey and Diary of Consumer Payment Choice (SDCPC) continue to show the central role of credit and debit cards in everyday consumer payments.

For collections organizations, this creates a straightforward opportunity.

Consumers are already accustomed to paying bills and making purchases with cards. When repayment portals support secure debit and credit card acceptance, consumers can complete transactions using familiar tools without changing their behavior.

ACH Remains Critical for Larger Obligations

Although cards dominate transaction volume, ACH remains one of the most important payment methods for recurring obligations and larger-dollar payments.

Many consumers use bank account transfers for mortgages, utilities, auto loans, insurance premiums, and other recurring bills. ACH payments often feel more intentional because they draw directly from a checking account rather than a revolving credit line.

For distressed consumers, ACH can be particularly valuable when repayment plans are involved.

Scheduled ACH arrangements reduce the need for repeated payment decisions. Once a consumer agrees to a payment plan, automatic withdrawals can help maintain consistency while reducing the risk of missed payments.

ACH also supports larger payment amounts that may be less practical through certain card-based repayment strategies.

The key is providing ACH as an option without forcing it as the only option.

Mobile Payments Are Reshaping Consumer Expectations

Perhaps the most significant payment trend is the growth of mobile payments.

Federal Reserve research found that younger consumers increasingly use mobile phones as their primary payment device. Adults between ages 18 and 24 used mobile phones for nearly half of their payments, far exceeding older demographic groups.

For these consumers, a repayment experience that requires printing documents, mailing checks, or navigating a desktop-only portal may feel outdated.

Mobile-first repayment experiences increasingly align with how younger consumers interact with financial services. Payment reminders delivered through SMS, secure payment links, digital wallets, and mobile-friendly self-service portals can significantly reduce repayment friction.

Cash Is Not Dead

Digital payments may dominate industry discussions, but cash remains surprisingly resilient.

The 2025 Diary of Consumer Payment Choice found that consumers continued making an average of seven cash payments per month, a figure that has remained stable for several years. Cash usage was particularly common among households earning less than $25,000 annually and among adults over age 55.

This finding carries important implications for collections operations. A collections strategy built entirely around digital payments risks excluding consumers who are willing to pay but prefer different methods.

Payment Behavior Varies by Income and Demographics

Research from the Federal Reserve Bank of Boston reinforces the importance of demographic differences.

Using 2023 Survey and Diary of Consumer Payment Choice data, researchers found meaningful variation in payment behavior across income groups and demographic segments. The study examined differences in the adoption and use of cash, cards, electronic payments, mobile payment applications, cryptocurrency, and buy-now-pay-later services.

The findings suggest that payment behavior cannot be treated as universal.

Lower-income consumers often demonstrate different payment patterns than higher-income consumers. Consumer perceptions of convenience, security, and cost also influence payment decisions.

For collections organizations, this means payment strategy should increasingly reflect customer segmentation rather than a one-size-fits-all model.

Matching the Payment Method to the Consumer

The most effective collections payment strategies recognize that consumers are not choosing between good and bad payment methods.

They are choosing between familiar and unfamiliar ones.

A younger consumer who regularly uses mobile payment apps may prefer a text message containing a secure payment link. An older consumer may feel more comfortable calling a representative and making a debit card payment over the phone. A consumer with inconsistent banking access may prefer cash payment options.

Each approach can be effective if it aligns with the consumer’s existing behavior.

The objective is not to push consumers toward a preferred creditor channel. Not everyone wants to pay the same way. Some will click. Some will call. Some will use a card. Others will authorize ACH. Some will still prefer cash.

The organizations that make repayment easiest across all of those preferences will be best positioned to convert engagement into actual payments.