experian millennial credit & finance survey report part ii
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1
EDELMAN BERLAND
Experian Millennial Credit & Finance Survey Report
Part IIFebruary 2016
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
Executive Summary
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• 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
Defining a Generation
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MILLENNIALS OLDER GENERATIONSPrefer to conduct banking on a
mobile devicePrefer 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 yearsConstantly 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 generation32% Parents’ generation26% Grandparents’ generation16% Unsure
Millennials’ Financial Mindset
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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?
Traveling the world
Buying a home
Buying a car
Starting a business
Going back to school
Having children
Changing careers
Getting married
49%
49%
39%
30%
28%
23%
22%
19%
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
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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?
Empowered
Secure
Informed
Satisfied
Confident
Hopeful
19%
20%
23%
25%
31%
44%
Emotions About Financial Future
72% Net Positive
Helpless
Confused
Frustrated
Worried
Overwhelmed
Stressed
15%
17%
22%
31%
31%
35%
61% Net Negative
• App user (82%)
• Check credit often (81%)
• Men (79%)
• Women (67%)
• Have debt (64%)
Millennials & Credit
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Credit report
Credit score
21%
20%
40%
37%
39%
43%
Frequency of Credit Check Never Every 6 months or lessEvery 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 AveragePoor Unsure
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Q21. And, to the best of your knowledge, what is your credit score?
300LOWEST
CREDIT SCORE
850HIGHEST
CREDIT SCORE
Millennials slightly overestimate their credit scores
625ACTUALAverage
Credit score
624Wome
n63519-24
654ESTIMATED
Average Credit Score
66425-34
680Men
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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.
77%
77%
76%
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%
Millennials & Debt
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Knowledge Gaps: Credit & Debt Management
Q1. How knowledgeable do you feel about each of the following aspects of personal finance? Credit & debt managementQ28. 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 Man-agement
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 © 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 CardsCredit cards are the greatest
thing
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
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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 USEA 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 points3 Cannot afford one Track expenses4 Not interested in having
oneGet advanced funding
5 Only want to spend money I have
Low introductory rates
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64%21%
7%5%4%
Credit Card Bill Payment(Shown: Among Credit
Card Users)Always Usually Sometimes Rarely
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
58%Pay the full
balance 42%
Pay the minimum
42%Pay the
minimum credit card payment
84%Pay credit card
bills on time
19 © Copyright 2015 Daniel J Edelman Inc. Intelligent Engagement
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
29%
29%
23%
20%
16%
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% Men33% Women
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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)
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
15%
15%
33%
38%
39%
46%
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 © 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?
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
70%
62%
62%
57%
54%
53%
30%
38%
38%
43%
46%
47%
Knowledge of Credit Card Policies and Rates
Knowledgeable Not knowledgeableShown: % Knowledgeable
Men Women
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%
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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 TimeAlways Usually Sometimes Rarely NeverNET
72% ON
TIMEVS.
NET 18%LATE
36%CURRENTLY
HAVE STUDENT LOAN DEBT
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 followingQ37. 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)
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
22%
28%
32%
35%
36%
40%
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 © 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)
I wanted to be able to mod-ify 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
26%
32%
42%
54%
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
Appendix
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Demographics
Totals may not add to 100% due to rounding
Category Subcategory Percent
GenderMale 50%
Female 50%
Age19-24 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%
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