Technology and trends change with each generation, a point that is true about millennials. The millennial generation has some unique preferences surrounding how they handle their finances that are different from what other people have used in the past. These points are especially true for credit cards. Millennials have unique ideas for what they want out of their cards.
The Most Intriguing Developments
There are many notable developments surrounding what millennials prefer for their finances:
- Close to half of all millennials prefer to use credit cards to complete their transactions.
- Traditional cash payments aren’t as prominent as they used to be. About 12 percent of millennials use cash as their preferred method for paying for items.
- About 40 percent of millennials use debit cards for their payment needs. The total is a drop from nearly 60 percent a few years back.
- Millennials are more likely than others to use mobile apps for their financial needs. They often use mobile apps to make deposits.
- Millennials are interested in doing business with traditional financial institutions. But they especially appreciate the ones that will invest in technology systems and setups.
- People have been completing balance transfers on their cards a little more often than they used to. Some of these transfers may come from debt-related issues.
Can They Cover Their Balance Statements?
There’s a good concern over whether millennials can cover their balance statements when paying off their credit cards. But the Motley Fool-associated Ascent website found in a recent survey that most people do cover their balance statements every month. About 60 percent of consumers say that they pay off their balances on their cards each month.
But slightly less than 20 percent of the respondents in that survey said that they pay the minimum balances on their card bills. The point is a concern, as people who cannot pay off their expenses will be subject to high interest charges. It would also take longer for people to pay off their entire balances if they don’t cover them soon enough.
What Do Millennials Want In Their Credit Cards?
The credit card industry is especially evolving, as it is looking to adapt to the unique needs that customers have when making purchases. Millennials are showing unique thoughts surrounding their credit cards. They want various things in their cards, including these points:
- Most millennials are looking for cash back offers on their cards.
- Millennials also want cards that don’t have annual fees.
- About a quarter of millennials want credit cards with low interest rates. While the number of those who pay their minimum balances is relatively small, those who do this are probably more likely to look for cards with these lower rates.
- Credit-related perks are prominent among millennials. These include points like credit monitoring and fraud protection support.
- Purchase protection is also critical among many card users. Return protection and extended warranty support are among the most popular points people can utilize.
What Types of Cards Do Millennials Want?
An average millennial will have about two credit cards in one’s name. The number is on par with other older generations, although baby boomers are more likely to have three cards.
Millennials have unique attitudes surrounding the cards they want:
- Store-specific cards aren’t as popular among millennials as they are with baby boomers. But they are still convenient for those who want something to pay for purchases at one site, especially since some come with special shopping benefits.
- Airline and travel cards are still popular with millennials. These cards allow people to earn rewards for travel purchases.
- Millennials do not think about whether card issuers are as widely accepted as others. They may be more willing to accept cards from any particular network out there.
Smartphones Will Especially Be Critical
Millennials use smartphones more than other generations. Financial technology will likely evolve and update to meet the needs that millennials hold. This work can include linking credit cards, bank accounts, and other investment items to apps people can access on their devices.
Millennials will prompt businesses to start making their financial services available anywhere. The effort will include providing quick access to accounts and other details while also offering consistent alerts. The fraud and purchase protection alerts that credit card companies offer today are examples of how they communicate with their customers more often.
Will Banks Compete?
While millennials are influencing changes in the financial technology and credit card industries, there are worries about whether banks can adapt to the needs people hold. Companies like PayPal and Stripe have been growing in prominence thanks to how easy it is for millennials to access these services. But traditional banks have been worried about whether their systems are going to be interesting to millennials.
The general worries that banks have is that they might be seen by millennials as being inflexible and incapable of managing their needs. Millennials might also consider these banks as being too regulated and strict.
Banks and other traditional financial service providers will need to adapt to the unique needs that millennials hold. They will need to do a few things to make their efforts more viable:
- They will need to offer more protection and coverage for clients. This work can include monitoring transactions and activities and providing alerts as necessary.
- Mobile access will be critical for traditional companies to consider. Mobile access can include providing apps that link people to their accounts from anywhere.
- The ability to integrate with multiple platforms will be essential. Banks and other groups that can integrate with social media systems and various tech items will be easier for millennials to trust and support.
- Decentralization may also be a necessity. Blockchain technology has made decentralized transactions more appealing. Banks could start working with cryptocurrencies and other blockchain-related assets, although they must also watch for the risks associated with these before they start.
Millennials are changing the credit card and financial technology industries. The ways these fields will continue to change will be interesting for people to watch as time progresses.