A survey of 2,000 UK adults revealed almost a third (31 percent) are confused when it comes to money and finances, with the meaning of AER and capital gains tax also leaving many scratching their heads. The difference between a money transfer and a balance transfer, what it means to be in negative equity and what APR stands for also feature in the list of confusing terms. It also emerged 60 percent wish they had learnt more about money in school, with 87 per cent admitting most of their knowledge has come from trying to manage their own finances.
The research was commissioned by Virgin Money as part of its’ Money on your Mind’ service, which connects a team of financial experts with customers to answer their questions and provide support.
A spokesperson for Virgin Money said: “Our personal finances are one of the most important things we deal with in our lives and it is easy to be overwhelmed by all the money-related jargon we regularly encounter.
“It is clear from our research that people wish they were better informed about financial terminology from a younger age.
“Whether we’re looking to join the property ladder, consolidate our finances or buy a new car, it’s important that we have a better understanding of how these processes work so we’re in the best position possible.”
Despite the housing market being a hot topic following the Chancellor’s recent announcements, 38 percent admitted they didn’t know what loan-to-value means, while 17 percent were unaware what Stamp Duty is.
And one quarter said they didn’t understand capital gains tax while 15 percent didn’t know the difference between a direct debit and a standing order.
Other financial terms which leave Brits confused include ‘equity release’, the ‘Bank of England base rate’ and ‘PAYE’.
The study also revealed that despite 91 percent of new cars in the UK being bought on finance, 54 percent of those polled didn’t know the difference between PCP (personal contract purchase) and PCH (personal contract hire).
And half of respondents also weren’t sure what a ‘balloon payment’ – the optional final payment at the end of a finance agreement – was.
But the study revealed the biggest catalyst for learning about money and finances is buying a home (41 percent), followed by taking out a credit card (26 percent) and starting a pension (25 percent).
And 18 percent of respondents said finding themselves in debt was the reason they started to learn more about money.
As a result of the lack of knowledge, 44 percent of those polled via OnePoll wished it was simpler to ask their bank questions about finances and money.
The findings come after internal data from Virgin Money revealed one quarter of the enquiries it has received from customers through its Money on your Mind service over the past two months have been classified as Covid-19 related.
These included queries such as ‘how long will my mortgage holiday last’, ‘can I extend my mortgage holiday’, ‘how do I get a refund on flights I have had cancelled’ and issues around getting refunds from holiday companies which haven’t been responding to requests.
More than one in 10 queries to Money on your Mind were related to ‘digital access’ for issues such as forgetting their password, registering for online banking and arranging an online money transfer.
A third (35 percent) needed to ask about their personal finances.
Virgin Money’s spokesperson added: “We know how complicated the world of money and finance is and how stressful it can be, so we launched Money on Your Mind to help make life easier for customers.
“This means those people who have questions about payment holidays, credit scores or anything else have somewhere they can go for easy answers.”
Learn more about Virgin Money’s Money on your Mind service here: https://www.youtube.com/user/virginmoneyuk/
TOP 20 FINANCE QUESTIONS BRITS ARE MOST LIKELY TO STRUGGLE WITH
1. What is the difference between PCP and PCH?
2. What is a balloon payment?
3. What does Loan to Value mean?
4. What does AER stand for?
5. What stocks and shares should I invest in?
6. What is capital gains tax?
7. What is the difference between a money transfer and a balance transfer?
8. What is negative equity?
9. What is equity release?
10. What does the Bank of England base rate mean?
11. What does Stamp Duty mean?
12. What does APR stand for?
13. What is the best type of savings account to have?
14. What affects my credit rating?
15. Does my student loan affect my credit rating?
16. What is the difference between a direct debit and a standing order?
17. Am I eligible for a mortgage holiday?
18. What is PAYE?
19. Should I get an ISA?
20. What is a credit score?
Source: Read Full Article