That much studied and targeted group of Americans known as Millennials, born between the early 1980s and mid-1990s, are big users of Alternative Financial Services (AFS).
AFS defines a group of costly financial products known for high fees or high interest rates. They include payday loans, pawnshops, auto title loans, tax refund advances, and rent-to-own products.
But the higher cost of these products apparently doesn’t deter these young adults. More than 40 percent of millennials used a payday loan, pawnshop, tax refund advance or other alternative financial product in the past five years. This percentage was one of the striking results of a survey of more than 5,000 millennials released Thursday by tax and consulting firm PricewaterhouseCoopers and the Global Financial Literacy Excellence Center at George Washington University.
“Millennials owe a lot. They know too little. Millennials’ struggle with debt may eventually become our problem, too,” writes Annamaria Lusardi, Academic Director, GFLEC at the George Washington University.
Another troubling result of the survey: When tested on financial concepts, only 24 percent demonstrated basic financial knowledge, the report says.
Student debt is also a common problem among millennials, many of whom are heavily leveraged with college loans.
• 54% are concerned about their ability to repay their student loan debt.
• 34% with annual household incomes above $75,000 are concerned they may not be able to repay their student loans.
Read the full report here.