Much has been written about the financial illiteracy among young adults. Then, there’s the poor economic conditions that make it difficult for many folks to put aside money for an emergency. These two facts are combining to make the perfect opportunity for alternative financial services marketers to tap a new client pool.
The Millennials, consumers between the ages of 18 to 34, are turning to a variety of alternative financial services that many associate with low-income demographics. Think Finance studied over 600 Millennials and their habits with respect to financial services like prepaid debit cards and check cashing. This group exhibited the following tendencies:
- Prepaid debit card: About 51% of consumers earning less than $25,000 and between $50,000 and $74,999 used these cards in the past 12 months.
- Check cashing services: These services were frequented by 34% of consumers with incomes of up to $25,000 and 29% of consumers with incomes between $50,000 and $74,999.
- Rent-to-own stores: Between 15% and 17% of consumers with incomes lower than $25,000 or between $50,000 and $74,999 signed up to purchase items through rent-to-own stores.
- Pawn shops: Consumers earning less than $25,000 visited pawn shops at the rate of 29%.
Millennials with annual incomes of between $50,000 and $74,999 are also more likely to use payday loans (22%), overdraft protection (58%), bank direct deposit advance (37%), and money transfers (39%).
Ken Rees, CEO of Think Finance says, “This study confirms that young people across the spectrum have a need for the convenience, utility and flexibility that alternative financial services provide.”
Look for these vendors to target Millennials with the next round of promotional messages.[Source: Millennials Use Alternative Financial Services. ThinkFinance.com. 17 May 2012. Web. 30 May 2012]