A new report recommends that banks should add prepaid cards to their products if they want to attract younger customers.
The Atlanta marketing-research firm Synergistics released a study Wednesday showing that people between the ages of 18 and 34 are more likely than other demographic groups to consider using a prepaid card instead of a checking account. In that age range, 41% of people said they are either "very likely" or "somewhat likely" to use a prepaid card in lieu of a checking account. That percentage was steady across income ranges, Synergistics said in the news release.
"Checking account providers… should give serious consideration to adding general-purpose prepaid cards to the checking product line," said Synergistics Chief Operating Officer Genie Driskill in the news release. "Depository institutions should not cede this place in the market to non-bank players, as many of these households may indeed become customers for traditional banking products as they improve their financial status over time,"
Overall, only 2% of all respondents said they use a prepaid card instead of a checking account, while 26% said they were likely to consider it. The percentage of respondents who said they were likely to use prepaid steadily declined as the age ranges increased, from 24% of people between 35 and 49 to 15% of those between 50 and 64 to just 3% of seniors.
The study also suggests that banks face tough competition from nonbanks in the prepaid market. Forty-one percent of respondents said they would buy a card at a bank or credit union, while 33% said a supermarket or department store.
The survey, Relationship Strategies for Checking Accounts, was based on 1,026 online interviews.
