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Capital One Canada Survey Asks Canadians: What is Your Personal Finance IQ?

June 28, 2006 at 12:00 AM EDT

Survey shows a need for a crash course on credit awareness

Toronto, ON – A new national survey shows that nearly six in 10 Canadians (57%) consider themselves to be “highly” or “very knowledgeable” on personal finance issues. Yet, other findings in the same survey, show that Canadians fall short on the ‘basics' of personal finance
-particularly when it comes to credit awareness and credit use. The survey, sponsored by Capital One, shows the necessity for a refresher course on the financial basics to ensure all Canadians are ‘money wise'.

“The results of this survey highlight the need for Canadians to be more mindful of their financial choices so that they understand how the decisions they make can affect their overall financial health,” said Diana Don, Director of Financial Education at Capital One.

The survey results reveal significant gaps between Canadians' perceptions about their financial habits and their actual practices.

  • While an overwhelming majority (84%) of Canadians use credit cards, many don't realize the importance of shopping around for the best deal – in fact, less than half (41%) agree that they shop around for the best deal when it comes to credit cards and other types of credit.
  • A quarter of Canadians do not know the most basic information about their credit cards - 25 percent say they are unsure or don't know the current interest rate on the credit card they use most often.
  • Credit reports are being overlooked as a useful financial tool - more than half (63%) of Canadians agree that they know what a credit score is but only 36 percent know their actual credit score. Almost four out of 10 Canadians (36%) never review their credit report.
  • Experts also agree that checking your credit report for errors is one of the best lines of defense consumers have to help protect themselves against credit card fraud and identity theft. Only 20 percent of people polled reported that they check their credit report the recommended once a year.

    Are Canadians Aware of All of their Credit Options?
    The survey also gauged perceptions about the use of various forms of credit and interest rates and found that while many Canadians know what they want, they may not always have the best deal.

    “A difference of only a few percentage points can make a substantial difference in the overall cost of the credit you use,” Don noted. “It's important that Canadians realize that there are more competitive credit options available that offer lower rates, convenience, flexibility and greater purchasing power. For example, Capital One Canada offers a low-rate Platinum MasterCard that can offer consumers with established credit histories rates as low as 8 percent (prime plus 2%), which can result in a striking cost savings compared to a card at 18%.”

    When asked about the credit tools they use regularly, nearly six out of ten (59%) Canadians agree that they would use a credit card if it had a lower interest rate, yet of those who have a line of credit, four in ten (40%) do so, primarily because they feel it offers the best interest rate.

    Don added that regardless of the method of credit they use, Canadians should be sure to shop around to identify the best options to meet their financial needs.

    For those who want to improve their financial IQ, Capital One Canada suggests starting with the basics:

  • Develop a budget and stick to it –Budgets help organize your finances and set parameters on spending. Developing – and sticking to – a budget is an important first step consumers can take to better their financial health.
  • Review your credit report at least once a year and know your credit score– Credit reports are used by lenders and others such as employers and landlords to assess risk. A low credit score could affect your financial options since it depicts your financial picture. It's important to review your credit report regularly to correct inaccuracies that can affect your score. Regular review of your credit report also helps you stop any suspicious activity or fraud – a sign of identity theft. The two main credit bureaus in Canada are TransUnion and Equifax.

  • Shop around for credit – Experts agree that comparison shopping for credit cards will allow you to find the best offer that meets your needs and fit your financial lifestyle. The Financial Consumer Agency of Canada (FCAC) offers a useful credit card comparison table on their website as a resource for consumers. Cards such as the Capital One low-rate Platinum MasterCard, recently named a ‘best pick' by MoneySense magazine, offer cardholders flexibility and low interest rates.
  • Weigh risks and rewards – Rewards offer great benefits to consumers and can be alluring, but be sure to evaluate offers based on broader criteria like interest rates and other fees, especially if you carry a balance on your credit card from month to month.
  • The Ipsos Reid survey was conducted from May 25 -29, 2006. For the survey, a nationally representative sample of 1,002 adult Canadians from the Ipsos-Reid Online Panel were interviewed Margin of error is ±3.02 percent at the 95% confidence level.

    Contacts: Cristina Rück Pam Girardo, Capital One
    cruck@apcoworldwide.com pam.girardo@capitalone.com
    Tel: (613) 565-4242 ext.222 Tel: (416) 228-5171

    About Capital One
    Located in Toronto, Ontario, Capital One has offered Canadian consumers a range of competitive MasterCard® credit cards since 1996, when the company first introduced the Platinum MasterCard® in Canada. Capital One Canada is a division of Capital One Bank, a subsidiary of Capital One Financial Corporation of McLean, Virginia (NYSE: COF).