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Millennials Shell Out for Convenience
Monday, June 17, 2013 6:30 AM

A new survey given exclusively to USA TODAY found that while 92 percent of those 18 to 34 year olds currently use a traditional financial institution, nearly half, or 45 percent, say they have also used outside services including prepaid cards, check cashing, pawn shops and payday loans.

For a generation in which many are finding themselves cash-strapped, in debt from student loans and underemployed, convenience appears to trump getting stuck with extra charges when it comes to quick access to cash and credit.

"It's flexibility and controllability that's really important for Millennials," says Ken Rees, president and CEO of Think Finance. "Banks don't have great products for people who need short-term credit. They're not really set up for that."

And he points out that more than 80 percent of survey respondents said emergency credit options are at least somewhat important to them.

These are options that have been historically known for charging fees. Check cashing can cost up to 3 percent of the amount of the check. Most prepaid debit cards come with at least a monthly fee.

The Think Finance survey revealed that Millennials don't seem to mind. Nearly a quarter cited fewer fees and 13 percent cited more predictable fees as reasons for using alternative products, though convenience and better hours than banks won out over both of those as the top reasons.

Banks are trying to catch up. The Bankrate survey points out that five major banks started offering prepaid cards in the past year, Wells Fargo, PNC, Regions Bank, JP Morgan Chase and U.S. Bank, and the cards are starting to become more mainstream as free checking accounts become more scarce. The Bankrate survey found that just 39 percent of banks offer free checking, down from 76 percent in 2009.

(Source: USA Today, 13 June 2013)