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Millennials Use Alternative Financial Services Regardless of their Income Level
Think Finance Survey Finds Young Americans are Satisfied with Emergency Cash Products

May 17, 2012

FORT WORTH, Texas - May 17, 2012 - A new survey of underbanked Millennials - 18-34 year olds who supplement their bank accounts with alternative financial services such as prepaid debit cards or check cashing - challenges the stereotype of alternative financial service users as the poorest members of society who are forced to turn to alternative products. The survey found that underbanked Millennials with mid - high levels of income are using alternative financial services at rates similar to, and in some cases higher than, their lower-income peers. The survey also found that the majority of Millennials who reported using payday loans and other forms of emergency cash are satisfied with the experience of using these products and consider them an important financial tool.

The study, released by Think Finance, a developer of next-generation online financial products, surveyed 640 Millennials who have used some type of alternative financial services product within the last year and earn less than $75,000 in annual income.

The survey found that several alternative financial products were used at similar rates regardless of income level, debunking the myth that only the poorest rely on alternative financial services. Millennial respondents with annual incomes significantly higher than the national median of $39,945 (U.S. Dept. of Commerce, Bureau of Economic Analysis) reported using alternative financial services at rates similar to peers who earn well below the national median. Products and services used at similar rates by Millennials at both the higher and lower ends of the income range include:

  • Prepaid debit cards - 51 percent of those making less than $25,000 in annual income reported using prepaid debit cards within the last year. The percentage was the same for those who earned $50,000-$74,999.
  • Check cashing services - 34 percent of respondents who earn less than $25,000 reported using check cashing services, while almost as many in the $50,000 - $74,999 range (29 percent) turned to check cashers.
  • Rent-to-own stores - 15 percent of respondents making less than $25,000 and 17 percent of those who earn $50,000-$74,999 reported using rent-to-own stores.
  • Pawn shops - 29 percent of respondents who earn less than $25,000 reported using pawn shops compared to 21 percent of respondents making $50,000 - $74,999.

Surprisingly, some of the alternative products that showed significant differences in usage across income level were more heavily used by mid - high income respondents than low income respondents. These products include:

  • Emergency cash products - Usage of payday loans, cash advance and other emergency cash products was higher among people making $50,000-$74,999 (22 percent) than those who earn less than $25,000 (15 percent).
  • Overdraft protection - 58 percent of respondents making $50,000-$74,999 reported using overdraft protection compared with 31 percent making less than $25,000.
  • Bank direct deposit advance - 37 percent of respondents who earn $50,000-$74,999 reported using bank direct deposit advance compared with 22 percent of respondents who earn less than $25,000.
  • Money transfer service - 39 percent of respondents who earn $50,000-$74,999 used money transfer services within the last year compared with 29 percent of those who earn less than $25,000.

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

Millennials satisfied with emergency cash products

Sixty-two percent of Millennial respondents who use emergency cash products said they consider the products to be extremely, very or somewhat important. A significant majority (83 percent) of respondents who use emergency cash products had a positive or neutral experience with 21 percent describing themselves as extremely satisfied, 34 percent describing themselves as somewhat satisfied and 28 percent saying the experience was neutral. Alternatively, 37 percent of survey respondents reported having had a bad experience with their bank at some point.

"In an ideal world, cars wouldn't break down, pets would never get sick and everyone would have a fully-funded emergency account," Rees said. "Unfortunately, that is not reality and Millennials, many of whom are managing high student loan debt loads, may find themselves in need of emergency cash solutions. It is gratifying to know that on the whole, Millennials are able to find solutions that help get them through tough times"

About Think Finance

Think Finance is a leading developer of next-generation financial products for underbanked consumers.  The company's products provide increased convenience, transparency and value to the millions of consumers whose needs are not being met by traditional banking products. Think Finance is privately held, with offices in Fort Worth, Texas and the United Kingdom, and is backed by some of Silicon Valley's most respected venture capital firms including Sequoia Capital and Technology Crossover Ventures.

Media Inquiries:
Kelly Ann Scott, 817-546-2650,
Emily Serafin , 646-277-1245,