COSTA MESA, Calif.—A new study shows that Millennials embrace technology and are quick to try new offerings—at the expense of loyalty. The study also includes a finding related to debt that may surprise some.
That is a finding from Experian’s latest study of Millennials—the first of two reports originating from a survey of more than 1,000 Millennials, covering a variety of personal finance topics—from their future views to loan status to credit knowledge to use of technology.
Key findings from the new study:
• Millennials have conflicted feelings about their personal finances; they are uncertain but lean toward optimism.
• A surprising number lack knowledge about credit – or show apathy toward it.
• A majority have had their credit, loan or lease attempts impacted – positively or negatively – by credit scores.
“Millennials are coming of financial age at a very unique time,” said Guy Abramo, president, Experian Consumer Services. “They’ve experienced a recession and the explosive advancement of personal technology. As a result, they’ve developed different views toward managing money, using credit and how they expect financial services to be delivered. The survey also showed that Millennials will abandon loyalty for better products and services, which is something the entire financial services sector should consider; the pressure is on to keep innovating.”
Abramo said that despite Millennials being associated most closely with student loan debt, credit card debt takes first position as the most common Millennial debt (38%), followed closely by student loans (36%). Others, in descending order, are: auto loans (28%), home loans (20%), personal loans (17%) and “other” (14%).
Other survey findings:
Pushing the edge of personal finance:
• The majority of Millennials (57%) use financial mobile apps to manage their finances.
• Millennials have, on average, three financial apps on their phones.
• Most (57%) Millennials are willing to use alternative companies/services that innovate to better meet their needs.
• A significant number of Millennials (39%) are familiar with “non-bank” lenders (e.g., Prosper, Lending Tree, Upstart) and 13% have already used such a service.
• Nearly half (47%) will likely use alternative lenders in the future, citing easier application process, not dependent solely on credit score, more accessible, faster review process and digital savvy.
Loyalty to a financial brand is a tough sell:
• Many Millennials (46%) look for new financial companies/services that better meet their needs
• More than three out of four Millennials will switch financial accounts if they find a better alternative.
• Most frequently mentioned reasons to switch include: better interest rates (47%), better reward programs (43%), better identity protection (32%) and better customer service (35%), among others.
Credit knowledge deficit:
• Most Millennials feel confident of their credit knowledge (71%); however, 32% don’t know their credit scores and 67% have questions as to how their scores are created.
• Among those who check their reports less than every three months, reasons for not checking reports and scores include: not necessary (35%/37%), afraid it will hurt their scores (24%/22%), unsure how to check their credit reports/scores (19%/18%).
• Millennials are very aware of how credit scores impact them; nearly three in four had a lending or leasing experience helped or hurt by their credit scores.
Youthful angst, but optimism prevails:
• Despite most having a handle on their finances (73%), more than half feel that they are “going it alone” (59%) and that “the odds are stacked against them” (57%).
• Top financial future concerns are supporting a family (30%), retirement savings (28%) and financial independence (25%).
• Nearly three out of every four survey participants had their loan, credit or rental applications impacted – positively or negatively – by their credit scores.
• Despite the concerns, 83% of respondents said being debt-free is an attainable goal; 71% feel confident about their financial futures.