Poll reveals widespread lack of confidence and knowledge when it comes to credit cards and mortgages
Canadians are giving themselves miserable grades in terms of their awareness of common financial products, according to a national survey from Rates.ca.
In a poll of 1,061 respondents across Canada who were 18 years old and above, 44% gave themselves a score of six out of 10 or lower when it comes to their financial literacy concerning credit cards. Another 62%, meanwhile, gave themselves the same grade in terms of their awareness on mortgages.
Credit cards: familiar, but not really
Three quarters (75%) of respondents said that they have one to three credit cards, while nearly half of respondents said they use their cards for at least 10 purchases every month.
But in spite of that familiarity with credit card usage, almost three quarters (68%) of Canadian respondents weren’t aware that interest on credit cards is calculated daily on their balance. That could be a problem for three out of 10 respondents who considered themselves likely or somewhat unlikely to make the minimum payment on their card.
Over a third of respondents (36%) said that they shared a joint credit card account with a partner, a parent, or children. The question of what the right age is for credit-card independence revealed a 46% cohort agreeing that young people should have their own credit cards by age 18; over one third thought 21 was the appropriate age, and 15% said young adults aren’t ready for the responsibility until they reach the age of 25.
Looking through a gender lens, 48% of women gave themselves six out of 10 or less when it came to financial literacy concerning their credit cards, as opposed to 41% of men.
More confusion on mortgages
Acknowledging the possibility that consumers are still getting used to recent regulatory changes, the poll found that half of respondents were unfamiliar or unsure about the types of mortgages available to them. In spite of that, 43% said they were comfortable negotiating their mortgage online.
Nine out of 10 weren’t aware that interest is charged semi-annually on a fixed-rate mortgage; 28% admitted they didn’t know how interest rates are charged, and the same percentage of people thought that interest is charged monthly. The remaining respondents were split down the middle (17% each) in believing interest is charged bi-weekly or annually.
Crucially, 61% could be leaving money on the table because they don’t know that with a 20% minimum down payment on a mortgage, they could avoid having to pay government insurance when purchasing a home.
The survey also found near-universal agreement (94%) that schools ought to focus more on teaching financial literacy.