Experian Millennial Credit & Finance Survey Report Part II

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


• 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


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


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


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


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


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


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


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


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


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


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


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


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)


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%


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


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


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


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%

Experian Millennial Credit & Finance Survey Report Part II

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