Gen Y Impacted by Recession; Becoming Financially Wiser
Credit Unions Offer Alternatives for Savvy Young Consumers
RANCHO CUCAMONGA, Calif. (October 25, 2010) – America’s Generation Y, born between 1979-1994, are entering the workforce bearing the full effect of the worst economic slump since the Great Depression. About 37 percent of 18-to-29-year-olds have been underemployed or out of work during the recession, according to a recent Pew Research Center study.
Young people are quickly learning their financial lessons from the economic turbulence, which has contributed to a growing wariness of banks among all consumers and greater interest in credit unions as potential primary financial institutions.
Compared with older groups, Gen Y know more about how the economy works, are savvier consumers and have a better understanding of their personal finances. In addition, the high number of Gen Y consumers with savings accounts – 75 percent surveyed by Pew, five percent higher than any other generation – may indicate a rapid maturity in financial management. Gen Y is also the first do-it-yourself retirement generation. Only 49 percent expect to rely on Social Security to fund their retirement. That’s about 30 percentage points lower than those ages 45 to 63.
Studies also find that less than half of Gen Y households are definitely satisfied or completely trust their primary financial institution. Credit unions, with their hundred-year heritage of service, are well-positioned to increasingly attract this dissatisfied Gen Y financial consumer.
Credit unions offer increasingly technologically-advanced financial tools, especially appealing to early adopters like Gen Y. Among the newest credit unions services are mobile banking accessed through basic or iPhones, home check scanning and depositing, and the latest in ATM and branch locator technologies accessible via text or GPS. Credit unions cooperate through credit union service organizations like CO-OP Financial Services, which provides credit union members access to CO-OP Network, the nation’s largest network of ATMs – 28,000 surcharge-free locations (9,000 of which accept deposits) – and to 4,000 shared branch locations, the fourth largest branch network in the country.
As not-for-profit cooperatives owned by their members, credit unions operate tax free and return earnings back their members in the form of higher rates for savings, lower fees for services and better rates on loans. Credit unions’ interest rates on credit cards are lower compared to bank rates and free checking is alive and well at many credit unions.
Credit unions also offer a more personalized way of handling personal finance. Many young people have difficulty obtaining credit because their incomes are low and they have little or no credit history. And the current credit crunch has caused many banks to tighten their lending standards. But because credit unions are chartered to serve their members’ needs and are less likely to be forced by the marketplace to change their underwriting standards, they are making loans others will not – and with comparatively lower rates and fees.
Most credit unions provide secure IRA accounts, small-business banking and investment advisory services. Credit unions have always played the important role of helping develop financial literacy, teaching their members how to plan, how to save and how to build credit – important to those just entering the work force and developing personal finance habits. For more than 20 years, customer satisfaction with credit unions has consistently rated higher than for banks.
“Younger, tech-savvy people enjoy services like plentiful, no-fee ATMs, online and mobile banking, and image deposits. Credits unions offer these. But those just starting their financial lives will also benefit from higher savings rates, lower fees and access to credit,” says Stan Hollen, president/CEO of CO-OP Financial Services. “Today’s credit unions offer today’s consumers, young and old, the tools and services they need to manage their increasing complex financial lives.”
About CO-OP Financial Services
Based in Rancho Cucamonga, Calif., CO-OP Financial Services is the industry leader in access and convenience products for credit unions. Nearing 30 years of credit union service, CO-OP connects credit union members to their accounts through network services, payment processing, e-commerce, CO-OP Shared Branching and call center services. With a total of 3,000 credit union members, 30 million cardholders, 28,000 surcharge-free ATMs, 4,000 shared branch locations and 160 million-plus monthly transactions, CO-OP Financial Services is the nation’s largest credit union service organization, offering the tools, counsel and leadership to help credit unions prosper. To learn more, visit www.co-opfs.org. Follow CO-OP on Twitter at: http://twitter.com/COOPFS and keep up with industry issues via the CO-OP Insight Vault blog at: http://co-opinsightvault.com.