It has been well documented that Millennials say they do not care for credit cards. New numbers shed a bit more light on this subject:
65 percent of Millennials do not have a credit card
36 percent have never even had one
It seems that prepaid cards are the most popular form of financial products for Millennials. A study revealed recently that 33 percent of young people either currently use or have prepaid debit cards. Just a few years ago, the trend was that only very specific groups, like teenagers and senior citizens, used prepaid cards. It looks like Millennials are bucking the system and are beginning to adopt prepaid cards as their preferred method of managing their money.
What is to blame for the rise in popularity of prepaid cards, while credit cards seem to be on the decline? Here are a few things that may be contributing to this phase:
Millennials grew up in an era when no one really used cash that much. They were used to seeing their parents use cards instead of checks or cash, so it makes sense that they would want a card-based form of payment to use for their purchases.
Prepaid cards also allow people to stay in control of their money a bit more than credit cards allow for. You can set limits with prepaid cards, while it is very easy to get in serious debt with a traditional credit card. In fact, many Millennials watched their parents dig into serious pits of debt, so they would like to avoid making the same mistakes.
Prepaid cards can also be integrated with mobile phone apps. The Millennials live and die by their smart phones. Mobile financial apps give prepaid card users the ability to check balances, track spending and even make money transfers, all in real time.
So, how can financial providers begin to play catch up with so many young people showing a clear preference for new forms of financial services?
For starters, the banks need to worry less about migrating people to full checking account customers and provide integrated services, apps and products that work hand-in-hand with prepaid cards. It just isn’t realistic to think that an entire generation is suddenly going to switch over to credit cards or other traditional financial products, when they have clearly demonstrated that they prefer prepaid options. As this group of consumers gets older, they may very well migrate a bit. However, the banks need to stop trying to force this to happen, as Millennial consumers are savvy enough to know when they are being pushed toward a product that they have no interest in using at the current time.
Better Mobile Apps
Many of the larger financial institutions have dropped the ball when it comes to offering the kind of robust, cutting edge financial apps that the younger generation would prefer to use. This is a generation of consumers who are always on the go. In order to meet the needs of this ‘mobile generation’ financial providers are going to need to offer plenty of user friendly, secure, fast-running apps that run on all of the major mobile platforms.
Like every other generation, the Millennials have shown, as they come of age that they don’t plan on doing things like their parents or even the generation immediately before them. This group is going to change the way that prepaid cards and mobile financial apps are used for some time to come. Lenders, banks and credit card companies would be wise to keep up to date with the needs of this generation and willing to supply financial products and services that meet and exceed those needs. If not, these young folks are more than willing to look for alternatives.
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