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Teens and Finance - US - January 2009

This report examines the use of financial services among teens as well as their knowledge levels and attitudes toward financial matters. It focuses on the key questions facing the financial services industry as it seeks to establish relationships with teens. Some of the questions that we will look at here include:

  • What is the level of teens' usage of financial service products?

  • How knowledgeable are teens are about financial matters?

  • What are their attitudes toward saving, spending, and debt?

  • What differences exist in this market by age group, gender, and ethnicity?

  • What are the most effective channels in marketing to teens?

  • How has the worsening economic situation in the U.S. affected this group?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Abbreviations and terms
            • Abbreviations
              • Terms
              • Executive Summary

                • Key points
                  • Use of financial services
                    • Sources of money and spending patterns
                      • Payment methods
                        • Competitive context
                          • Hispanic teens
                            • Marketing channels
                              • Market drivers—demographics
                                • Leading companies
                                  • Advertising and promotion
                                    • The consumer
                                      • Cluster analysis
                                      • Insights and Opportunities

                                        • Fast Forward Trends

                                            • Trend: Market as Conversation
                                              • What we have seen
                                                • Implications
                                                  • Trend: Edutainment
                                                    • What we have seen
                                                      • Implications
                                                      • Market Size

                                                        • Key points
                                                          • Teens’ use of financial services
                                                            • Many teenagers already have established a banking relationship
                                                              • Figure 1: Teen incidence of bank account ownership, April 2007-June 2008
                                                              • Figure 2: Type of bank account among teens with a bank account, April 2007-June 2008
                                                              • Figure 3: Type of bank account among all teens, April 2007-June 2008
                                                              • Figure 4: Incidence of spending on selected categories in last 12 months, by gender and age, February 2008
                                                              • Figure 5: What teens spend money on, April 2007-June 2008
                                                              • Figure 6: Bank account ownership trends, 2001-08, April 2007-June 2008
                                                              • Figure 7: Total U.S. teen spending, at current prices, 2002-12
                                                              • Figure 8: Total U.S. teen spending, at inflation-adjusted 2007 prices, 2002-12
                                                              • Figure 9: Stocks and mutual funds owned by high school seniors, 2008
                                                            • Teen debit card use is on the rise
                                                              • Figure 10: Whether have own atm/debit card, April 2007-June 2008
                                                              • Figure 11: ATM/debit card ownership trends: 2003 to 2008, May 2003-June 2008
                                                              • Figure 12: Number of times used atm/debit card in past 30 days, April 2007-June 2008
                                                              • Figure 13: Debit/ATM card use by high school seniors, 2008
                                                            • Teens use credit cards but not in their own name
                                                              • Figure 14: Credit card use and ownership by high school seniors, 2008
                                                            • Teens are rapidly adopting prepaid and gift card use
                                                            • Competitive Context

                                                              • Key points
                                                                • Credit unions are active players in the teen market
                                                                  • Prepaid cards
                                                                    • Other types of financial products
                                                                    • Segment Performance—Hispanic Teens

                                                                      • Key points
                                                                        • The Hispanic teen market is rapidly expanding
                                                                          • Hispanic teens are the new trendsetters
                                                                            • Hispanic teens are becoming more acculturated
                                                                              • Hispanic teens still lag non-Hispanics in use of financial services
                                                                                • Figure 15: Bank account ownership and debit/atm card usage by Hispanic and non-Hispanic teens, April 2007-June 2008
                                                                            • Marketing Channels

                                                                              • Key points
                                                                                • Effective marketing to teens online should include social networking and video sharing
                                                                                    • Figure 16: U.S. online social network advertising spending, 2006-11, December 2007
                                                                                    • Figure 17: U.S. online social network advertising spending, by site/type of network, 2007 and 2008, May 2007
                                                                                    • Figure 18: Online video content viewership, by age, November 2007
                                                                                  • Traditional media formats such as TV are still important to kids.
                                                                                    • Word of mouth marketing should not be ignored when targeting teens
                                                                                    • Market Drivers

                                                                                      • Key points
                                                                                        • Teen population trends
                                                                                          • Teens represent one out of 10 American consumers aged 12 to 75
                                                                                            • Figure 19: U.S. teen population, individual ages 12-17, by gender, 2008
                                                                                          • The growth trajectory for the teen population in the U.S. is not linear
                                                                                            • Figure 20: U.S. teen population 12 to 17, projected growth trends in five-year intervals from 2000 to 2030
                                                                                          • The face of tomorrow’s teens is diverse, and white teenagers will lose their majority status
                                                                                            • Figure 21: U.S. teen population, individual ages 12-17, by race/ethnicity, 2008
                                                                                          • The Hispanic segment of the teen population is growing at an explosive rate
                                                                                            • Figure 22: U.S. teen population aged 12-17, projected growth trends in five-year intervals from 2000 to 2030, by ethnicity, 2008
                                                                                          • Size and share of “other” teens is also increasing
                                                                                            • Figure 23: U.S. teen population 12 to 17, projected growth trends in five-year intervals from 2000 to 2030, by ethnicity, 2008
                                                                                        • Teens—Making Money

                                                                                          • Teens are working less as they focus on education
                                                                                              • Figure 24: Share of teens aged 16-17, by gender and race, in labor force, employed and not employed, 2007
                                                                                              • Figure 25: Employment status of teens aged 16 to 17, by gender and race, 2007
                                                                                              • Figure 26: monthly unemployment rate for 16-19 year olds versus workers 16+, seasonally adjusted, 2008
                                                                                              • Figure 27: Incidence of teens earning money, April 2007-June 2008
                                                                                              • Figure 28: Average weekly salary before taxes, April 2007-June 2008
                                                                                              • Figure 29: Teen employment trends, 2001-08, April 2001-June 2008
                                                                                            • Teens’ other money sources
                                                                                              • Figure 30: Primary source of spending money for teens aged 12-17, by age and gender, October 2008
                                                                                              • Figure 31: Whether teens get an allowance or money for chores, April 2007-June 2008
                                                                                              • Figure 32: Weekly allowance amount, April 2007-June 2008
                                                                                          • Teens—Spending Money

                                                                                            • Teen spending is expected to decline through 2012
                                                                                              • Teens often pay with cards, particularly prepaid or gift cards
                                                                                                • Figure 33: Payment methods used by teens in past year, by age and gender, October 2008
                                                                                              • Most teens still prefer to use cash
                                                                                                • Figure 34: Agreement with statement: “I prefer to use a credit card rather than cash,” by age and gender, October 2008
                                                                                              • Some teens express interest in using their cell phone for payments
                                                                                                • Figure 35: Agreement with statement: “I think it would be great to pay for merchandise by swiping my cell phone rather than using a credit or debit card,” by age and gender, October 2008
                                                                                              • Teens spending outlook is impacted by the economic downturn
                                                                                              • Leading Companies

                                                                                                • Key points
                                                                                                  • Visa has led the way in promoting teen payment cards
                                                                                                    • MasterCard distinguishes its offerings by appealing more directly to teens
                                                                                                      • American Express has been less active in this arena
                                                                                                        • Several other companies have failed in their efforts to focus on the teen population
                                                                                                        • Advertising and Promotion

                                                                                                          • Key points
                                                                                                            • Card offerings
                                                                                                              • Figure 36: Visa Buxx Card direct mail piece, 2005
                                                                                                            • Banking offers
                                                                                                                • Figure 37: Torrance Community credit union direct mail advertisement, 2008
                                                                                                                • Figure 38: Navy Federal Credit Union direct mail advertisement, 2008
                                                                                                            • The Consumer

                                                                                                              • Key points
                                                                                                                • U.S. teens lack basic financial literacy
                                                                                                                    • Figure 39: Finance related high school courses taken, 2008
                                                                                                                    • Figure 40: Teens’ self-perceptions of financial knowledge, October 2008
                                                                                                                    • Figure 41: Teens’ opinions relating to financial knowledge, October 2008
                                                                                                                  • Teens mainly look to their parents to teach them about finances
                                                                                                                      • Figure 42: Ways teens have learned about money, by age and gender, October 2008
                                                                                                                    • Interest in financial education
                                                                                                                        • Figure 43: Teens’ opinions relating to financial knowledge
                                                                                                                      • Teens express favorable opinions about saving money
                                                                                                                          • Figure 44: Teens attitudes toward money, April 2007-June 2008
                                                                                                                          • Figure 45: What teens are saving for, October 2008
                                                                                                                        • Teens have mixed opinions about credit card use
                                                                                                                            • Figure 46: Attitudes toward debt and credit cards, April 2007-June 2008
                                                                                                                          • Wise spending habits decline as teens mature
                                                                                                                              • Figure 47: Attitudes toward spending
                                                                                                                            • U.S. teens are worried about the economic downturn
                                                                                                                                • Figure 48: Impact of the economic downturn on teens’ attitudes, October 2008
                                                                                                                            • Cluster Analysis

                                                                                                                              • Key points
                                                                                                                                • Cluster analysis overview
                                                                                                                                  • Investigators
                                                                                                                                    • Who they are
                                                                                                                                      • Opportunity
                                                                                                                                        • Savers
                                                                                                                                          • Who they are
                                                                                                                                            • Opportunity
                                                                                                                                              • Allowers
                                                                                                                                                • Who they are
                                                                                                                                                  • Opportunity
                                                                                                                                                    • Cluster demographic characteristics
                                                                                                                                                      • Figure 49: Teen finance clusters, October 2008
                                                                                                                                                      • Figure 50: How have you learned about managing money? by teen finance clusters, October 2008
                                                                                                                                                      • Figure 51: Please indicate which of the following methods you have used to pay for things in the last year? by teen finance clusters, October 2008
                                                                                                                                                      • Figure 52: If you have a savings account, what are you primarily saving for? by teen finance clusters, October 2008
                                                                                                                                                      • Figure 53: Are you worried about current economic conditions in the U.S.? by teen finance clusters, October 2008
                                                                                                                                                      • Figure 54: What is your primary source(s) of spending money? by teen finance clusters, October 2008
                                                                                                                                                      • Figure 55: What do you feel is your level of knowledge about financial matters? by teen finance clusters, October 2008
                                                                                                                                                      • Figure 56: Which of the following do you prefer to receive as a gift? by teen finance clusters, October 2008
                                                                                                                                                      • Figure 57: Please indicate whether you agree or disagree with the following statements, by teen finance clusters, October 2008
                                                                                                                                                    • Cluster demographics
                                                                                                                                                      • Figure 58: Teen finance clusters, by gender, October 2008
                                                                                                                                                      • Figure 59: Teen finance clusters, by age group, October 2008
                                                                                                                                                      • Figure 60: Teen finance clusters, by race, October 2008
                                                                                                                                                    • Cluster methodology
                                                                                                                                                    • Appendix: Other Useful Consumer Tables

                                                                                                                                                      • Financial product ownership by race/ethnicity
                                                                                                                                                        • Figure 61: Bank account ownership, by ethnicity, April 2007-June 2008
                                                                                                                                                        • Figure 62: Whether have atm/debit card, by ethnicity, April 2007-June 2008
                                                                                                                                                        • Figure 63: Whether has credit card in own name, by ethnicity, April 2007-June 2008
                                                                                                                                                        • Figure 64: Incidence of teens earning money, by ethnicity, April 2007-June 2008
                                                                                                                                                        • Figure 65: Whether teens get an allowance or money for chores, April 2007-June 2008
                                                                                                                                                        • Figure 66: What teens spend money on, by ethnicity, April 2007-June 2008
                                                                                                                                                        • Figure 67: Financial attitudes, by ethnicity, April 2007-June 2008
                                                                                                                                                    • Appendix: Trade Associations

                                                                                                                                                      Companies Covered

                                                                                                                                                      • America's Community Bankers
                                                                                                                                                      • American Express Company (The)
                                                                                                                                                      • Bank of America Corporation
                                                                                                                                                      • BITS
                                                                                                                                                      • Capital One Financial Corporation
                                                                                                                                                      • Charles Schwab Corporation
                                                                                                                                                      • Consumer Bankers Association
                                                                                                                                                      • Credit Union National Association
                                                                                                                                                      • Discovery Channel
                                                                                                                                                      • Facebook, Inc.
                                                                                                                                                      • Federal Deposit Insurance Corporation
                                                                                                                                                      • Federal Reserve System
                                                                                                                                                      • First Data Corporation
                                                                                                                                                      • Greenfield Online
                                                                                                                                                      • Henry J. Kaiser Family Foundation
                                                                                                                                                      • Independent Community Bankers of America
                                                                                                                                                      • ING Direct
                                                                                                                                                      • Jump$tart Coalition for Personal Financial Literacy
                                                                                                                                                      • Junior Achievement Inc.
                                                                                                                                                      • MasterCard Incorporated
                                                                                                                                                      • McDonald's U.S.A.
                                                                                                                                                      • MySpace.com
                                                                                                                                                      • Navy Federal Credit Union
                                                                                                                                                      • PayPal Inc.
                                                                                                                                                      • Piper Jaffray Companies
                                                                                                                                                      • The American Bankers Association
                                                                                                                                                      • The Conference Board
                                                                                                                                                      • The Financial Services Roundtable
                                                                                                                                                      • The Wendy's Company
                                                                                                                                                      • U.S. Bureau of Labor Statistics
                                                                                                                                                      • U.S. Bureau of the Census
                                                                                                                                                      • Visa U.S.A. Inc.
                                                                                                                                                      • Wachovia Corporation
                                                                                                                                                      • Wells Fargo & Company
                                                                                                                                                      • Word of Mouth Marketing Association
                                                                                                                                                      • YouTube, Inc.

                                                                                                                                                      Teens and Finance - US - January 2009

                                                                                                                                                      £3,174.67 (Excl.Tax)