CHERRY HILL, N.J.—A new study indicates that Millennials are leading the way with prepaid card usage.
TD Bank polled more than 1,300 Americans – including some who currently use reloadable prepaid cards and some who don't – to gain insight into consumers' attitudes toward and experiences with the cards.
It found that one-quarter of Americans either currently use or have used a reloadable prepaid card in the past two to three years, but among Millennials this proportion jumps to one in three.
Additionally, the survey found that of Millennials who don't currently use a reloadable prepaid card, 60% would consider using one, compared with 49% of the overall population. Among Baby Boomers, this percentage drops to 34%.
"Millennials quickly adapt to new tools and technologies that help them manage money more efficiently," said Tami Farrow, SVP, head of retail deposit payments at TD Bank. "We know from our continued research that millennials favor debit cards and want to avoid overspending. Prepaid cards provide all the flexibility of a debit card, but with the added control of only spending what you load."
In addition to Millennials, consumers who have neither a checking nor a savings account take advantage of reloadable prepaid cards significantly more than Americans in general, according to the survey. Forty-two percent of people in this population currently use or have recently used a reloadable card.
The survey also found that people's perceptions of how the cards are used don't align with how they are currently being utilized. For those respondents who haven't used a reloadable prepaid card but would consider trying one, 59% said they'd likely use the card for online shopping, 48% said they'd use it for discretionary spending and only 44% said they'd use it for day-to-day purchases.
However, among the respondents who currently use or have recently used a reloadable prepaid card, the most popular usage is day-to-day purchases (61%), followed by online shopping (56%) and discretionary spending (52%).
Security is a major reason why people are drawn to reloadable prepaid, according to the survey. Among the respondents who currently use or have recently used a reloadable prepaid card, 85% feel or felt extremely or very secure about their finances and personal information when using the card.
In addition, of the respondents who don't currently use a reloadable prepaid card but would consider using one, the most popular perceived benefit of the card is that it allows people to keep personal information private and safely transact online; 53% of these people agreed with this statement.
The survey also found that security was a significant factor for consumers who obtained reloadable prepaid cards from banks or financial institutions, as opposed to big box retailers or convenience stores. Among the respondents who currently use or have recently used a reloadable prepaid card and obtained that card from a bank or financial institution, 57% said that an FI-issued card feels more secure.
"Consumers have told us they are concerned with the safety of their money and personal information, and their habits with reloadable prepaid cards demonstrate they feel secure using them, especially when making day-to-day purchases or shopping online," Farrow said. "Not only do most cards – especially those that are bank-issued – provide protections from things like fraud, but they also allow these consumers to safely transact in our increasingly digital world."