Survey Finds Widespread Ignorance When it Comes to Borrowing
The Washington, D.C.-based Center for Economic and Entrepreneurial Literacy released survey that underscores the need for increased education on personal finance and economic issues. The national survey, conducted this month, shows that an overwhelming number of Americans are unable to answer even the most basic questions about borrowing and interest rates.
Highlights from the survey include:
Sixty-nine percent of respondents did not know that you have to pay both the interest on your entire balance as well as a late fee when making a late credit card payment.
Ninety-seven percent of respondents could not identify the percentage that service fees typically take out of a $20 ATM withdrawal. More than 90 percent either didn't know how much the fee would be or thought it was less than it really was.
Nearly 70 percent of respondents did not identify "FICO score" as the most important factor in obtaining a home loan, when asked to choose from a list of four factors.
Only 16 percent of respondents knew that you can withdraw money from a Roth IRA for education expenses, your first home purchase, and retirement spending.
In order to highlight this problem, CEEL's public service announcement will be distributed to over 1000 local television channels across the country. The PSA features three children discussing what their loan options would be when purchasing a doll house. The ad illustrates how confusing getting a mortgage can be especially for those who haven't been educated on the subject matter. You can view the ad at http://econ4u.org.
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