Press release -
Over 1.7 Million Young People Admit They're Financially Illiterate
- 33% of young people across the UK believe they don’t have a strong grasp of financial terminology, compared to just 13% of those aged over 55
- One in three say they are embarrassed by their lack of money knowledge and one in five have bought a financial product recently without fully understanding it
- Over four out of ten (41%) wish more information and advice was available to improve their financial knowledge
A third of all 18 to 24 year olds in the UK (over 1.7 million) admit they are left confused by common financial terms, according to new research released today by Post Office Financial Services.
The Money Matters report reveals that, whilst the Government is looking to address financial education by making it a part of the compulsory national curriculum, there is a whole generation of young people in the UK who are still in the dark when it comes to understanding financial terminology.
In stark contrast, older generations are far more confident and financially savvy, with only 13% of people aged over 55 saying they don’t have a good grasp of the terms and jargon associated with finance.
One in three people aged between 18 to 34 (34%), for example, do not know what PAYE stands for, compared to just 6% of those aged over 45. Some 9% incorrectly guessed it meant Permanent Average Yearly Extra.
Similarly, three out of ten 18 to 24 year olds (31%) don’t know the meaning of APR, compared to just 6% of those aged over 55; 13% thought it meant Annual Profit Rise rather than Annual Percentage Rate.
Table 1: Post Office Financial Services reveals the top ten most commonly misunderstood financial terms:
Financial terms |
% of people who don’t understand |
|
1 |
Basis points (Bps) |
64% |
2 |
CPI |
48% |
3 |
Income drawdown |
46% |
4 |
RPI |
40% |
5 |
Negative Equity |
40% |
6 |
Mortgage Indemnity guarantee |
35% |
7 |
Loan to Value |
29% |
8 |
Intermediary |
28% |
9 |
Yield |
26% |
10 |
Shared equity |
21% |
A third of young people (33%) are also concerned that not being ‘in the know’ makes them look foolish. But perhaps most worryingly of all, 18% said they have bought a financial product recently without fully understanding it.
Better financial education is seen as vital by people of all ages, with almost three in ten (29%) wishing more information and advice was available.
The findings from Post Office Financial Services were issued as the high-street brand launches a new advertising campaign reminding the public about the breadth and depth of its financial services, from mortgages right through to savings.
Nick Kennett, Director of Financial Services, said: “We were surprised by just how many people, especially young people, are still baffled by financial terms. The banking industry has worked hard to eliminate unnecessary jargon and acronyms but it seems there is still some way to go before people feel completely comfortable speaking the language of money. What’s worrying is how many people could be either potentially missing out on attractive deals on financial products, or simply avoiding money matters completely, for fear of looking foolish.”
“At Post Office Financial Services, we’re committed to simplifying how we communicate to our customers and we aim to help bridge the gap for customers who are feeling confused about financial services and are too embarrassed to ask for help.”
Ends
For more information, please contact:
Carmel McCarthy
Post Office Press Office
Tel: 020 7250 2268
Mob: 07717 294529
Email: carmel.mccarthy@postoffice.co.uk
Twitter: @postofficenews
Notes to Editors:
1 Research conducted by One Poll on behalf of the Post Office. 2,000 online interviews were conducted in January 2014.
About Post Office: Post Office Limited has an unrivalled national network of over 11,500 branches across the UK, more than all the high street banks combined, and sits at the heart of many communities across the country. The Post Office has made a commitment to no more branch closure programmes. It provides around 170 different services and products spanning financial services including savings, insurance, loans, mortgages and credit cards. Post Office also offers Government services; telephony; foreign currency; travel insurance and mail services.
It serves around 18 million customers a week and almost half of small businesses. 99.7% of the total population live within three miles of a post office. For many rural communities the post office is the only retail outlet. Post offices remain highly valued and trusted and are the focal point for many communities. For more information, visit www.postoffice.co.uk
Bank of Ireland UK has been the exclusive partner to the Post Office for the provision of financial services and products since 2003. The partners’ venture has become one of the UK’s fastest growing financial service providers with almost three million customers and a savings book of £18 billion and the leading supplier of foreign exchange in the marketplace.
Bank of Ireland has supported customers in the UK for many decades. Bank of Ireland UK plc, is a wholly owned subsidiary of Bank of Ireland Group, separately incorporated and is authorised and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Activities related to the Post Office partnership are conducted within this entity and as such, all retail deposits up to £85,000 with the Post Office are protected under the UK’s Financial Services Compensation Scheme and ring-fenced in the UK. At 31 December 2012 Bank of Ireland (UK) plc had a loan to deposit ratio of 77% with customer deposits of £23.3 billion utilised to fund customer lending of £18 billion (primarily comprising £12.6 billion of UK residential mortgages). In November 2010, in the UK Government's report 'Securing the Post Office network in the digital age', Bank of Ireland UK received the explicit support of the Coalition Government for its continued partnership with the Post Office.
Contact - Carmel McCarthy
Categories
About the Post Office
The Post Office (Post Office Limited) has an unrivalled national network of over 11,500 branches across the UK, more than all the high street banks combined, and sits at the heart of communities in Northern Ireland, Scotland, Wales and England. The Post Office has made a commitment to maintaining its network of branches at its current size and reach. It provides around 170 different products and services spanning financial services including savings, insurance, loans, mortgages and credit cards; Government services; telephony; foreign currency; travel insurance and mail services.
The Post Office serves over 17 million customers a week and a third of small businesses. Some 99.7% of the total population live within three miles of a post office and over 97% live with one mile of a post office. For many rural communities, the post office is the only retail outlet. Post Offices branches remain highly valued and trusted, and are the focal point of many communities. For more information, visit http://www.postoffice.co.uk/.
Please note the Press Office team can only deal with enquiries from the media. Unfortunately they do not have access to customer information so can not help with customer enquiries.
If you have an enquiry regarding any Post Office product or service please visit postoffice.co.uk or call 0845Local call rates apply. Call costs may vary depending on your service provider. Calls may be monitored or recorded for training and compliance purposes. 611 2970.
