When it comes to understanding and using reloadable prepaid cards, millennials lead the way, according to TD Bank’s study.
The bank polled more than 1,300 Americans—including both some who currently use reloadable prepaid cards and some who don't—to gain insight into consumers' attitudes toward and experiences with the cards.
Who’s using, who would use
The bank’s research found that one-quarter of Americans (25%) 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%).
Additionally, the survey found that of millennials who don't currently use a reloadable prepaid card, 60% would consider using one, compared with 49% of the overall population.
Among boomers (ages 55+), this percentage drops to 34%.
"Millennials quickly adapt to new tools and technologies that help them manage money more efficiently," says Tami Farrow, senior vice-president, 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."
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.
Mismatch of perceptions and usage
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% said they'd likely use the card for online shopping; 48% said they'd use it for discretionary spending; and only 44% 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%), followed by online shopping (56%) and discretionary spending (52%).
How prepaid can help budget struggle
When it comes to the most popular tactics consumers use to stick to a budget, the TD Bank survey found that 68% of consumers rely on couponing. This factor was followed by shopping in the discount section of stores (62%); buying products in the off-season (44%); and carrying a specific amount of money while shopping (35%).
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% 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 and privacy also drive interest
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% feel 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% 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% 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 says. "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."
The study was conducted among a nationally representative sample of 1,301 Americans. Interviews were completed from Feb. 16–20, 2015. The sample size has a margin of error of +/- 2.7%. The survey was hosted by global research company Vision Critical.