America's 'Financial IQ' Survey Shows Both Understanding and Gaps
According to Capital One's survey, the economy is clearly changing the way Americans manage their money. Nearly three-quarters of those surveyed (73%) said that current economic conditions have caused them to change their daily spending habits. Among other cost-saving strategies, 68 percent of those consumers reported that they are eating out less often, 62 percent are cutting back on entertainment expenses (spending on movies, concerts and books), and more than half (54%) said they are cancelling or postponing vacation plans and clipping coupons (54%). Most (64%) are using budgets to manage expenses and only 26 percent modify their budget when an unexpected expense comes along. Americans are also regularly checking account balances for errors and recent activity with 32 percent of those surveyed checking weekly.
"Budgeting and regularly checking account statements are important basics to help consumers track their spending and maintain a healthy financial plan," said Diana Don, Director of Financial Education at Capital One. "Consumers should also take steps to prepare for their financial future and longer-term goals by regularly saving, checking credit reports annually, and keeping an eye on credit scores."
The economy is also impacting personal savings. Nearly half (47%) of those surveyed said they are putting less money into savings and the same number (47%) report that current economic conditions have caused them to dip into their savings to cover day-to-day expenses. While a third of those surveyed (33%) said they save regularly every month, only 12 percent report that they are saving the recommended 10 to 15 percent of their income for the future, and another 12 percent said they are not saving anything at all. Traditional savings accounts top the most popular financial saving instrument with half of Americans using one. Unfortunately, most (32%) reported that they do not know the interest rate on their savings account.
"Managing your finances in a way that enables you to save even small amounts of money is important. In addition to planning and saving for future goals, having an emergency fund is critical to help get you through the unexpected," said Don.
According to the survey, the majority of Americans (59%) consider themselves to be highly knowledgeable or very knowledgeable when it comes to personal finance, a slight decrease from 64 percent in 2007. Nearly two-thirds (63%) of those surveyed say they are extremely comfortable or very comfortable managing short-term finances but only half (54%) feel comfortable managing long-term finances.
Capital One strongly encourages consumers to develop personal budgets to meet their short and long-term financial goals. Following are tips consumers can use to get started.
-- Establish your financial goals - Before creating a budget, you must first consider and establish your own financial goals. Short-term goals could include setting aside money to cover regular household expenses or saving toward an annual family vacation. Long-term financial goals might include planning for retirement or saving for a second home. -- Develop a realistic budget that you can stick to - Create a budget that captures all of your household expenditures, including setting aside money for saving. This ensures you are in control of your financial situation and on track to meet your financial goals.
What do Americans know about credit?
Credit scores are also an important indicator of financial well-being - the higher your credit score, the more likely you are to be approved for loans and receive favorable rates. Experts agree that checking your credit report for errors is the best line of protection against identity theft, credit card fraud and other crimes. While the majority (55%) of Americans know that they can get their annual credit report for free, only 41 percent of those surveyed said they review their credit report once or more each year and nearly two out of ten (19%) have never checked their credit report. Capital One offers these tips consumers can use to protect and improve their credit.
-- Check your credit report at least once a year - Regularly checking your credit report is one of the best ways to protect against identity theft and credit fraud. Consumers are eligible for one free credit report every year from each of the three major credit reporting agencies. Individuals can request their free credit report online at www.annualcreditreport.com or by calling 1-877-322-8228. -- Correct any mistakes on your credit report - Credit reports can contain mistakes and it is your responsibility to correct them by contacting each of the three major credit reporting bureaus - Equifax, TransUnion and Experian.
MoneyWi$e program arms consumers with financial tools and information.
Education is the key to a healthy financial future. To help consumers, Capital One and Consumer Action created the MoneyWi$e financial education program. MoneyWi$e combines free, multilingual financial education materials with community training and seminars to give consumers at all income levels the information and the practical assistance they need to make smart financial choices. The MoneyWi$e eLearning tool provides interactive modules, worksheets and calculators to help consumers with various personal finance topics, including saving, budgeting, and rebuilding credit. Consumers can access the MoneyWi$e eLearning tool in English and Spanish at http://www.capitalone.com/financialeducation/cbt/launcher.htm.
The findings reported in this release are from a telephone survey conducted by the opinion research firm, Braun Research of Princeton, NJ. The survey entitled "America's Financial IQ" was fielded from September 16-23, 2008. Braun Research completed 1003 interviews throughout the continental United States. Interviews were verified and monitored at random.
Sampling was designated using a national probability sample of all exchanges and area codes across the United States and quotas were kept to ensure geographical spread proportional to the US Census estimates of US population. The margin of error for this study is +/- 3.1% at the 95 % confidence level. Statistical weights were designated from figures and estimates on the website of the United States Census Bureau www.census.gov.
About Capital One
Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A. and Capital One Bank (USA), N.A., collectively had $109 billion in deposits and $210 billion in total managed assets as of December 31, 2008. In addition, Capital One's newly acquired subsidiary, Chevy Chase Bank, F.S.B., had more than $16 billion in total managed assets and $13 billion in deposits as of December 31, 2008. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One, N.A. and Chevy Chase Bank, F.S.B. have approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.
SOURCE Capital One