Experian Millennial Credit & Finance Survey Report Part II
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Experian® has released additional findings from a national survey among more than 1,000 millennials, ages 19 to 34, showing that this generation struggles with using credit as a tool to enhance their lives. This struggle can be attributed to unawareness of credit terms and conditions and a mixed attitude regarding credit cards. A majority (64 percent) of survey respondents consider them “dangerous,” while almost 30 percent have maxed out a card.
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Experian Millennial Credit & Finance Survey Report Part II
- 1. 1 EDELMAN BERLAND Experian Millennial Credit & Finance Survey Report Part II February 2016
- 2. 2 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement WHO HOW MANY ACCURACY WHEN HOW Millennials Nationwide (Adults age 19-34) n=1,002 Margin of Error = +/- 3.1% Data Collection Occurred August 14-19, 2015 Online Survey RESEARCH OBJECTIVE: Garner mediagenic data around Millennials’ perceived financial situation and credit score to compare against and expand upon existing Experian data Research Methodology
- 4. 4 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement • Compared to older generations, Millennials consider themselves to be: • More Digital: They prefer to conduct their banking on mobile and like brands that utilize new technology • More Experimental: They want to see innovation in the industry and they’re willing to try alternative brands • Less Loyal: They are willing to switch to brands that better suits their needs, such as providing lower interest rates, better rewards programs or more free services • Millennials have mixed emotions about their personal finances: • They feel their finances are holding them back from their life goals like traveling the world or buying a home • They feel less financially stable than their parents did at their age, and they worry about being able to support a family, save enough for retirement, pay off their debt or even just become financially independent • In the long run, however, they are optimistic and feel confident about their financial futures • There are significant knowledge gaps with regard to Millennials and their credit: • The majority of Millennials consider themselves to be knowledgeable about credit scores and reports, but they rarely check their credit reports and one in three does not know his or her credit score • Similarly, Millennials perceive themselves to be knowledgeable about credit and debt management, yet most credit card users do not know their card’s interest rate Key Findings
- 6. 6 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement MILLENNIALS OLDER GENERATIONS Prefer to conduct banking on a mobile device Prefer to conduct banking at banks with a physical location Prefer financial brands that utilize new technology and mobile services In the best position to establish a financial foundation in their early adult years Constantly monitoring financial accounts on mobile devices Loyal toward financial brands and institutions Open to using free financial services Uncomfortable with borrowing money Want more innovative offerings from traditional financial brands Educated about credit and debt management Willing to switch financial brands and institutions Open to using alternative financial companies and services The Millennial Generation: Untethered & Experimental Q7. Which generation do you think is / was in the best position to establish a solid financial foundation in their early adult years? Q8. Please match each of the following financial attributes with the generation that it best describes: your generation or older generations. Q42: Is the following statement is more descriptive of your generation or older generations? Open to using alternative financial companies and services 25% My generation 32% Parents’ generation 26% Grandparents’ generation 16% Unsure
- 8. 8 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement Personal finances hold Millennials back from their life goals, like traveling the world or buying a home Q4. To what extent do you agree or disagree with each of the following statements? Q5. Below is a list of different life goals. Which, if any, of the following goals do your finances hold you back from pursuing? 49% 49% 39% 30% 28% 23% 22% 19% Traveling the world Buying a home Buying a car Starting a business Going back to school Having children Changing careers Getting married Life Goals Compromised by Finances 64% Say their personal finances are holding them back from pursuing life goals Held Back from Life Goals 68% AMONG THOSE WITH DEBT 68% HAVE DEBT
- 9. 9 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement Millennials have mixed emotions about their financial future – they feel stressed but hopeful Q3. In general, how do you feel when thinking about your financial future? 19% 20% 23% 25% 31% 44% Empowered Secure Informed Satisfied Confident Hopeful Emotions About Financial Future 72% Net Positive 15% 17% 22% 31% 31% 35% Helpless Confused Frustrated Worried Overwhelmed Stressed 61% Net Negative • App user (82%) • Check credit often (81%) • Men (79%) • Women (67%) • Have debt (64%)
- 11. 11 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement 21% 20% 40% 37% 39% 43% Credit report Credit score Frequency of Credit Check Never Every 6 months or less Every 3 months or more Most check their credit irregularly, but assume that their score is “average” to “good” Q17. How often do you check your… Q20. Do you think your credit score is poor, average, or good? • App user (51%) • Men (45%) • 25-34 (43%) • 19-34 (30%) • Women (23%) • App user (56%) • Men (49%) • 25-34 (46%) • 19-34 (30%) • Women (22%) 50% 26% 16% 7% Perception of Credit Score Good Average Poor Unsure
- 12. 12 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement Q21. And, to the best of your knowledge, what is your credit score? 300 LOWEST CREDIT SCORE 850 HIGHEST CREDIT SCORE Millennials slightly overestimate their credit scores 625 ACTUAL Average Credit score 624 Women 635 19-24 654 ESTIMATED Average Credit Score 664 25-34 680 Men
- 13. 13 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement 77% 77% 76% My credit history could affect my ability to get a loan. My credit history could affect my ability to get a good interest rate. I understand which financial factors are currently helping or hurting my credit. Credit Understanding Statement Agreement (Shown: % Agree, Top Two Box) Older Millennials and those with debt have a better understanding of credit and its potential impacts Q22. Below is a series of statements about credit. To what extent do you agree or disagree with each of the following statements? 19-24 25-34 Debt Free Any Debt 73% 79% 72% 79% 75% 79% 71% 80% 72% 79% 64% 81%
- 15. 15 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement Knowledge Gaps: Credit & Debt Management Q1. How knowledgeable do you feel about each of the following aspects of personal finance? Credit & debt management Q28. Which of the following best describes how you pay your credit card bill(s)? (Asked if credit card user, n=669) Q29. Now, thinking about the credit card that you use most often, what is your credit card’s interest rate? Spending limit? (Asked if credit card user, n=669) Q30. Which, if any, of the following have you ever experienced regarding a credit card in your name? (Asked if credit card user, n=669) 58% Pay the full balance 42% Pay the minimum Perceived Knowledge about Credit & Debt Management 76% KNOWLEDGEAB LE Vs. 53% DO NOT KNOW THEIR INTEREST RATE (ON AVERAGE, IT’S 12.8%) 32% DO NOT KNOW THEIR SPENDING LIMIT (ON AVERAGE IT’S $5,028) 29% HAVE MAXED OUT A CREDIT CARD 23% HAVE HAD THEIR CREDIT CARD INTEREST RATE INCREASED 42% PAY THE MINIMUM AMOUNT INSTEAD OF THE FULL BALANCE
- 16. 16 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement Millennials consider credit cards a necessary evil Q23. Which of the following statements comes closest to your view… Q24. How many credit cards (not debit), if any, do you have open in your name? Attitudes Toward Credit Cards Credit cards are the greatest thing Credit cards are dangerous 64% Think credit cards are dangerous YET 2 IN 3 HAVE AT LEAST ONE CREDIT CARD (67%) AND CARD HOLDERS HAVE AN AVERAGE OF 3 CARDS
- 17. 17 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement They are wary of spending beyond their means but still want to establish their credit and earn rewards Q25. What are some of the reasons why you not have a credit card? (Open-ended question asked if does not have a credit card, n=333) Q26. For what reasons do you choose to use a credit card instead of cash or a debit card? (Asked if credit card user, n=669) TOP REASONS TO NOT USE A CREDIT CARD (Shown: Among non-credit card users) TOP REASONS TO USE A CREDIT CARD (Shown: Among credit card users) 1 Do not want to go into more debt Build credit history 2 Do not need one Earn rewards points 3 Cannot afford one Track expenses 4 Not interested in having one Get advanced funding 5 Only want to spend money I have Low introductory rates
- 18. 18 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement 64% 21% 7% 5% 4% Credit Card Bill Payment (Shown: Among Credit Card Users) Always Usually Sometimes Credit card payments are on time but often just cover the minimum amount Q27. Which of the following best describes how you pay your credit card bill(s)? (Asked if have at least one credit card, n=669) Q28. Which of the following best describes how you pay your credit card bill(s)? (Asked if have at least one credit card, n=669) 84% Pay on time 34% 25% 26% 16% Payment Amount (Shown: Among Credit Card Users) Always pay outstanding balance Usually pay outstanding balance 58% Pay the full balance 42% Pay the minimum 42% Pay the minimum credit card payment 84% Pay credit card bills on time
- 19. 19 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement 29% 29% 23% 20% 16% Maxing out a credit card Getting charged a late fee for a payment Having a credit card interest rate go up Having a credit card declined Defaulting on a credit card payment Top Credit Card Issues (Shown: Among Credit Card Users) More than half have had an issue with credit card spending or late payments Q30. Which, if any, of the following have you ever experienced regarding a credit card in your name? (Asked if have at least one credit card, n=669) 58% ANY OF THESE Women 33% Men 26% 26% Men 33% Women
- 20. 20 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement Emergencies, low spending limits or simply a lack of monitoring can prompt users to max out their cards Q31. Approximately how many credit cards have you maxed out? (Asked if have maxed out credit card, n=197) Q32. And, for what reasons have you maxed out a credit card? (Asked if have maxed out credit card, n=197) 15% 15% 33% 38% 39% 46% Get the maximum rewards points Someone stole my credit card information Made a big ticket purchase Did not realize my spending levels Have a low spending limit Made an emergency transaction Reasons for Maxing Out Credit Cards (Shown: Among Those Who Have Maxed Out a Credit Card) 3 for womenAVERAGE NUMBER OF CREDIT CARDS MAXED OUT: 2 (WOMEN: 3)
- 21. 21 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement Only half of Millennials know how annual percentage rates are calculated Q34. How knowledgeable do you feel about each of the following? 70% 62% 62% 57% 54% 53% 30% 38% 38% 43% 46% 47% My credit cards’ policies on “grace periods” for late payments How to get a higher spending limit on a credit card How penalties are assessed for late credit card payments How annual percentage rates apply to monthly credit payments How to get a lower interest rate on a credit card How annual percentage rates are calculated Knowledge of Credit Card Policies and Rates Knowledgeable Not knowledgeable Shown: % Knowledgeable Men Wome n 19-24 25-34 72% 68% 67% 72% 67% 57% 55% 67% 68% 57% 55% 68% 63% 51% 49% 62% 62% 45% 47% 58% 63% 44% 47% 58%
- 22. 22 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement One in five Millennials pay their student loans late Q38. Earlier you mentioned that you have student loans. Which of the following best describes how you pay your student loans? (Asked if have student loans, n=357) 52% 20% 10% 7% 11% Payment of Student Loans On Time Always Usually Sometimes Rarely Never NET 72% ON TIME VS. NET 18% LATE 36% CURRENTLY HAVE STUDENT LOAN DEBT
- 23. 23 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement Some opt for an auto lease because it allows for lower down payments and monthly bills Q15. Below is a list of different types of leases, loans and debts. Please indicate whether you currently have or have ever previously had any of the following Q37. Earlier, you mentioned that you have leased an automobile. Which, if any, of the following reasons describe why you chose to lease your automobile, rather than take out an auto loan to purchase it? (Asked if have ever had an auto lease, n=277) 22% 28% 32% 35% 36% 40% Avoid hassle of selling the vehicle My credit made it difficult to get a good loan Can drive a new vehicle every 2-3 years Lower monthly payments Could afford a better vehicle Lower down payment Top Reasons for an Auto Lease (Shown: Among Those Who Have Had an Auto Lease) 28% CURRENTLY OR HAVE EVER HAD AN AUTO LEASE
- 24. 24 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement Most prefer an auto lease because its more cost- effective in the long run Q35. Earlier, you mentioned that you have an auto loan. What is the term of your auto loan? (Asked if currently have an auto loan, n=281) Q36. Earlier, you mentioned that you have taken out an auto loan. Which, if any, of the following reasons describe why you chose to take out an auto loan to purchase your automobile, rather than lease it? (Asked if have ever had an auto loan, n=493) 26% 32% 42% 54% I wanted to be able to modify my vehicle I needed to put more mileage on the vehicle than a lease would allow I wanted to be able to trade- in or sell my vehicle whenever necessary Buying a vehicle is more cost-effective in the long run Top Reasons for an Auto Loan (Shown: Among Those Who Have Had an Auto Loan) 47% 30% 23% Auto Loan Terms (Shown: Among Auto Loan Holders) 4 yrs or less 5 yrs or more Don't know
- 25. Appendix
- 26. 26 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement Demographics Totals may not add to 100% due to rounding Category Subcategory Percent Gender Male 50% Female 50% Age 19-24 42% 25-34 58% Race / Ethnicity White 58% African American 14% Hispanic 20% Asian American 6% Other 2% Region Northeast 18% Midwest 21% South 38% West 23% Category Subcategory Percent Education High school or less 23% Some college 38% Bachelor’s degree 34% Post-graduate 5% College Student Status Full-time 40% Part-time 11% Not a student 49% Marital Status Not married 61% Married 38% Income Less than $50K 49% $50K to less than $100K 37% $100K or more 11%
Editor's Notes
- Survey Methodology The data points referenced above come from a study commissioned by ConsumerInfo.com, Inc., an Experian company, produced by research firm Edelman Berland and conducted as an online survey nationally among a representative sample of 1,002 Millennials (adults age 19-34). Interviewing took place from August 14-19, 2015. The margin of error is plus or minus 3.1 percent.