Millennials using alternative financial services regardless of income, claims survey

Stereotypes that only the poor use alternative financial products not accurate

A new survey from Think Finance, a next-generation online financial product developer, has found that underbanked Millennials (people aged between 18-34) with mid to high levels of income are using alternative financial services at rates similar to, if not higher, than their lower income peers (view press release). The results debunk the myth that only the poorest rely on alternative financial services. The survey also found that the majority of Millennials (62%) using payday loans and other forms of emergency cash are satisfied with these products and consider them an important financial tool. The survey was carried out among 640 Millennials who have used some type of alternative financial product within the last year and earn less than USD 75,000 annually.

Products and services used at similar rates by both higher (between USD 50-74,999 annually) and lower income Millennials (less than USD 25,000 annually) include Prepaid debit cards, 51% of both salary brackets reported using this within the last year; Check cashing services, 34% of the lower income bracket used this compared to 29% of the higher income bracket; Rent-to-own stores, 15% of the lower compared to 17% of the higher; and Pawn shops, 29% of the lower compared to 21% of the higher.

Certain alternative financial products were also more heavily used by higher income Millennials than lower. These include Emergency cash products which 22% of the high income bracket used compared with 15% of the lower; Overdraft protection, 58% of the higher used this compared with 31% of the lower; Bank direct deposit advance, 37% of the higher compared with 22% of the lower; and Money transfer service, 39% of the higher compared with 29% of the lower.

Stereotypes that paint users of alternative financial products as poor and uninformed are simply not accurate,” said Ken Rees, Think Finance CEO. “This study confirms that young people across the spectrum have a need for the convenience, utility and flexibility that alternative financial services provide.”

Related reading

Leave a comment