New Survey Signals Rising Popularity of Prepaid Cards, Led By Millennials
Budgeting capabilities and security cited as key benefits, according to TD Bank research.
CHERRY HILL, N.J., April 6, 2015 /PRNewswire/ -- When it comes to understanding and using reloadable prepaid cards, millennials are leading the way, according to a new survey conducted by TD Bank, America's Most Convenient Bank®.
The 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 (25 percent) either currently use or have used a reloadable prepaid card in the past two to three years, but among millennials (ages 18 – 34), this proportion jumps to one in three (33 percent).
Additionally, the survey found that of millennials who don't currently use a reloadable prepaid card, 60 percent would consider using one, compared with 49 percent of the overall population. Among boomers (ages 55+), this percentage drops to 34 percent.
"Millennials quickly adapt to new tools and technologies that help them manage money more efficiently," said Tami Farrow, SVP, Head of Retail Deposit Payments, 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."
Who's Using Reloadable Cards and How
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 TD Bank 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 percent said they'd likely use the card for online shopping, 48 percent said they'd use it for discretionary spending and only 44 percent 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 percent), followed by online shopping (56 percent) and discretionary spending (52 percent).
Reloadable Prepaid Cards as a Budgeting Tool
When it comes to the most popular tactics consumers use to stick to a budget, the TD Bank survey found that 68 percent of consumers rely on couponing, followed by shopping in the discount section of stores (62 percent), buying products in the off-season (44 percent) and carrying a specific amount of money while shopping (35 percent).
But consumers recognize that a prepaid card can also help them spend and save intelligently. According to the survey, of the respondents who currently use or have recently used a reloadable prepaid card, 46 percent feel that one of the main benefits of the card is that it allows them to budget better and keep track of their spending.
Security a Significant Benefit of Prepaid Cards
Security is a major reason why people are drawn to reloadable prepaid cards, according to the TD Bank survey. Among the respondents who currently use or have recently used a reloadable prepaid card, 85 percent feel or felt extremely or very secure about their finances and personal information when using the card.
Plus, 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 you to keep your personal information private and safely transact online; 53 percent 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 percent said that a bank-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."
Last month, TD Bank launched TD Connect, a new general purpose reloadable bank card that can be used wherever Visa debit cards are accepted. TD Connect is the perfect budgeting tool that only allows you to spend the funds loaded onto the card.
Anyone 18-years-old and over can walk into one of TD Bank's approximately 1,300 stores from Maine to Florida and sign up to receive a TD Connect Card, including those who are not an existing customer. TD requires a Social Security number, valid form of identification and a minimum deposit of $25 to sign up.
Survey Methodology
The study was conducted among a nationally representative sample of 1,301 Americans. Interviews were completed from February 16 – 20, 2015. The sample size has a margin of error of +/- 2.7%. The survey was hosted by global research company Vision Critical.
About Vision Critical
Vision Critical provides a cloud-based customer intelligence platform that helps companies build engaged, secure communities of customers they can use continuously, across the enterprise, for ongoing, real-time feedback and insight.
About TD Bank, America's Most Convenient Bank®
TD Bank, America's Most Convenient Bank, is one of the 10 largest banks in the U.S., providing more than 8 million customers with a full range of retail, small business and commercial banking products and services at approximately 1,300 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Bank and its subsidiaries offer customized private banking and wealth management services through TD Wealth®, and vehicle financing and dealer commercial services through TD Auto Finance. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.tdbank.com. Find TD Bank on Facebook at www.facebook.com/TDBank and on Twitter at www.twitter.com/TDBank_US.
TD Bank, America's Most Convenient Bank, is a member of TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services company in North America. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol "TD". To learn more, visit www.td.com.
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SOURCE TD Bank
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