There is a disjoint gap between how confident the average Australian feels about their financial literacy and how extensive their actual banking knowledge is, a new survey has found.
While 13% of those polled in a recent ME survey said their banking knowledge was “below average,” six in ten scored less than 50% in a basic banking literacy quiz.
The findings of the online survey, which took results from 1,500 Australians, was an indication that many consumers may make poor decisions with regards to banking, said ME head of deposits and transactional banking Nic Emery.
“Among the most worrying findings, 74% had no clue about home loan comparison rates, meaning they may not be aware of the fees they are paying, while 61% mistakenly believe they’d lose money if their bank went under despite the government guarantee, which means they may be ignoring higher deposit rates at smaller banks.”
Other gaps identified in the survey include 42% of those polled failing to understand compound interest and 36% not realising that shortening the length of a loan reduces the total interest paid.
A contributor to this problem was a lack of education with 35% of those polled saying they had done nothing to inform themselves of the different banking products and services available, Emery said.
“Some Aussies fail to educate themselves because they find banking dull and complex and think they know best, while others find working with numbers difficult and put their head in the sand.”
Since banking is part of our everyday lives, it should be a life skill like learning to cook or catching public transport, Emery said.
“Banking choices are best made on facts – a hunch or a guess could lose you thousands.”
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