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Second Annual Survey of America's ''Financial IQ'' Shows Americans Still Need a Dose of Fiscal Fitness

October 5, 2006 at 11:16 AM EDT
Survey finds Americans are starting to master the art of managing daily finances but continue to fall short when it comes to protecting their credit

MCLEAN, Va., Oct 05, 2006 (BUSINESS WIRE) -- Despite the fact that almost six out of 10 Americans consider themselves "very" or "highly" knowledgeable when it comes to personal finance, the second annual survey of America's IQ on personal finance from consumer advocacy group Consumer Action and leading financial services provider Capital One (NYSE:COF) finds that Americans are still in need of a dose of fiscal fitness. The national survey of 1,003 men and women reveals that Americans are making strides when it comes to managing their daily finances. However, as with the survey's initial findings in 2005, many are still not taking steps to protect and improve their credit scores, despite the fact that Americans' have had access to free copies of their credit reports for over a year now.

The 2006 survey found that:

-- Americans' ability to stay on top of daily financial matters has improved. Sixty-five percent use budgets regularly - a positive sign and slight improvement from last year (64 percent). Americans also show improvement when it comes to sticking to their budgets - sixty-six percent report that they maintain the budgets they create, compared to only 60 percent last year.

-- Americans continue to fall short in taking steps to protect their credit. Twenty-seven percent of Americans have never checked their credit report - a four percent increase from last year.

"The good news from this survey is that Americans are getting better when it comes to managing their day-to-day finances, such as using budgets and checking account balances frequently. It's equally important, however, for people not to overlook other important financial tasks, like regularly checking their credit reports," said Diana Don, director of financial education at Capital One.

Americans are exercising greater control over their daily finances, but improvement is needed.

The Capital One-Consumer Action survey finds that Americans' financial habits are good, particularly when it comes to keeping track of expenses. More than six out of 10 Americans are using budgets regularly and two-thirds (66 percent) report that they stick to their budgets and modify them rarely or if unexpected expenses arise. An additional 54 percent of Americans report that they are checking banking and credit account statements more than once a month.

But problems remain. More than a third (35 percent) of Americans still do not use budgets regularly - only a slight improvement from the 36 percent who reported the same last year. Age groups that are the least likely to budget include younger Americans, aged 18- 29 (36 percent do not use budgets), and older Americans, aged 60-70+ (47 percent report they do not use budgets).

Capital One and Consumer Action strongly encourage 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 a 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.

Americans fall short when it comes to protecting their credit.

Credit scores are also an important indicator of your 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 growing crimes such as phishing and skimming. Yet, for the second year in a row, the Capital One-Consumer Action study reveals that many people don't regularly obtain their credit reports. Twenty-seven percent of those surveyed reported that they have never checked their credit report - an increase from the 23 percent who reported the same last year. An additional 20 percent admit to only checking their report when making a large purchase. Despite the availability of a free annual credit report from each of the major reporting agencies, 47 percent of Americans are unaware that the reports are free of charge.

"What many people don't realize is that landlords, insurance companies, and employers - not just banks - check credit records," said Ken McEldowney, Executive Director of Consumer Action. "Your credit score can impact your ability to get a loan, a job, and even rent an apartment, so it's important to regularly obtain a copy from each of the three major credit bureaus and check each for accuracy. Reports are easier than ever to obtain and cost nothing. It's startling that many Americans are still not taking advantage of this resource."

Consumer Action and Capital One offer these tips consumers can use to protect and improve their credit.

-- Correct any mistakes on your credit report - Credit reports can contain mistakes and it's your responsibility to correct them by contacting each of the three major credit reporting bureaus - Equifax, TransUnion and Experian.

-- Protect against identity theft by checking your credit report - 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. Copies can be requested online at or by calling 1-877-322-8228.

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 series includes a number of free, multilingual brochures on a variety of personal finance topics, including improving and rebuilding credit, budgeting, and saving and investing. Consumers can obtain free brochures by visiting

Survey Methodology

For Capital One's Financial IQ study, Braun Research was engaged to conduct 1003 interviews with adults age 18 years of age or older across the United States. Surveys were conducted by telephone from August 29th through August 31st, 2006. The margin of error for the research project is plus or minus 3.1 percentage points. Interviews were monitored and verified at random. Sampling for this study was conducted using a national probability sample of all exchanges and area codes known in the continental United States. All interviews were conducted using a computer assisted telephone interviewing system. Statistical weights were designed from United States Census Bureau statistics.

About Capital One

Headquartered in McLean, Virginia, Capital One Financial Corporation ( is a financial holding company, with more than 324 locations in Texas and Louisiana. Its principal subsidiaries, Capital One Bank, Capital One, F.S.B., Capital One Auto Finance, Inc., and Capital One, N.A., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One's subsidiaries collectively had $47.2 billion in deposits and $108.4 billion in managed loans outstanding as of June 30, 2006. Capital One, a Fortune 500 company, trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.

About Consumer Action

Consumer Action is a national non-profit education and advocacy organization founded in San Francisco in 1971. Consumer Action serves consumers nationwide by advancing consumer rights, referring consumers to complaint-handling agencies and publishing multilingual educational materials. Consumer Action also advocates for consumers in the media and before lawmakers and annually conducts comparison surveys for consumers on credit cards, banking issues and telecommunications issues.

SOURCE: Capital One Financial Corporation

Capital One Financial Corporation
Diana Don, 703-720-2371