The Center for Economic and Entrepreneurial Literacy (CEEL) has released a new survey that underscores the need for increased education on personal finance and economic issues. The national survey conducted last week shows that an overwhelming number of Americans are unable to answer some of the most basic questions about borrowing, interest rates, terminology, and even basic math. More troubling is that many Americans admit to making poor decisions with their own personal finances.
Startling highlights from the survey include:
• 54 percent of respondents could not identify what a sub-prime mortgage was.
• 56 percent of respondents could not identify FICO score as the most important factor in getting a loan.
• 65 percent of respondents could not identify what would remain if you subtracted 25 percent from 8.
• One in three respondents could not identify what one percent of 50,000 was.
• 75 percent did not know that when in need of short-term emergency cash, bouncing a check costs more than wire transfers, credit card advances, and short-term payday loans.
• Half of respondents have overdrafted their checking account at one time, while a third of respondents have paid a bill late in the past year.
• 35 percent of respondents admitted to not having a family or personal budget that would allow them to conceivably eliminate their credit card debt by the end of 2009.
"Economic illiteracy is at the heart of our current economic crisis," said James Bowers, managing director for CEEL. "As many Americans find themselves knee-deep in mortgages that are far too expensive and that they don't understand, it's troubling to see just how deep our economic illiteracy runs. In fact, our survey shows that a majority of Americans don't understand even the most basic facts about the economic crisis and many don't have the tools to manage their personal finances."
"It is clear that we need to increase personal finance education at all ages so we have better informed employees, borrowers, and voters."
This survey represents the findings of a telephone survey conducted by Opinion Research Corporation among 1,004 adults living in private households in the continental United States.
For more information, visit www.econ4u.org.