The Federal Reserve Bank of Philadelphia published a report that surveyed millennial’s spending habits, focusing on their use of banks and alternative payment systems. Although some of the results were expected – millennials are most likely to choose alternative payment systems such as PayPal, along with peer-to-peer lending, the report also found one huge surprise. Millennials, and not just the less fortunate ones, are becoming increasingly fond of prepaid debit cards.
While the conventional opinion on these cards is that they are mostly used by underbanked populations and people with low income, the majority of millennials do have access to conventional debit and credit cards. The surprise here is that they prefer prepaid debit cards to most other payment options. As a matter of fact, according to this report, 83% of young people who use prepaid credit cards also have debit cards. Around 60% of millennials that aren’t in a bad financial situation (with household incomes of $100,000 and higher) use prepaid credit cards.
According to a survey by TD Bank, a third of Americans who are 19-36 years old have used a prepaid debit cards. In addition, 60% of US millennials would consider using a prepaid card in the near future, compared with half the general public.
As Vested Research Series show, millennials are very concerned about safety which is why they choose prepaid debit cards over their regular bank accounts. With prepaid cards, they easily control the amount of money they might be putting at risk should the card get stolen.
“These cards are much more mainstream than many people think,” said Tami Farrow, TD Bank’s head of retail deposit payment products, as CNBC reports.
According to the TD Bank survey, 60% of millennial prepaid debit card users said the cards let them keep better track of their spending. Some of the perks young people are most fond of are the following:
Unlike a traditional credit card, millennials can receive their prepaid debit cards without going through a credit check and a bad credit score won’t deny them a card. They are a generation that’s weighed down by student loans, and bad credit score is not uncommon. Anyone can get a prepaid debit card.
Prepaid debit cards are favored for controlling spending. They allow millennials to budget and make sure they don’t spend more than they have, preventing them from falling into the depths of debt.
More than half of prepaid debit cards have no monthly fee whatsoever, while others choose to waive the monthly fee after a certain amount is loaded on the card. Fees are easier to avoid on prepaid debit cards than on credit cards and bank accounts.