“Financial Literacy and Credit Cards: A Multi Campus Survey,” released poignantly in April, also known as Financial Literacy Month, was jaw dropping.
The report, which surveyed 725 business students, found — in our unadulterated opinion — an extreme lack of financial knowledge from a group of students who should have known better.
More than 90 percent of the students who participated were business majors, 47 percent were at least seniors, 61 percent had taken business ethics and 74 percent had taken business law.
And they knew little to nothing about business transactions that most of them made each month.
Here are the survey’s findings: “Only 14.6% of students claimed to know the interest rate they paid on credit. … Only 9.4% of students paid their credit card in full each month. … Only 29.2% claimed to know the penalty for being over their credit balance. … A strong majority (75.7%) had no idea of late payment charges on their credit card.”
If these are our brightest minds for tomorrow’s businesses, then we might as well start trading wooden nickels for doomed dollars.
It’s this kind of blatant stupidity and lending practices that bankrolled the nation’s financial system in the first place.
Disposable personal income drives an economy. It’s that money left over after rent, car payments, food costs and other everyday expenditures. It trickles into local businesses and stabilizes bank accounts.
And it’s not easy to come by.
The 2008 recession adversely affected the nation’s fiscal integrity in several ways, but perhaps the most pervasive way is the inability to secure and build the credit needed to obtain a loan.
The plummet in disposable income from 2008 to 2009 was the sharpest decline since the Great Depression. And the stagnant recovery has pitted lenders against the public, with a sea of interest rates separating the two.
What this means is that you’re not likely to get past a loan application or receive a respectable mortgage with a credit score of less than 740.
And if you don’t know the interest rate for your credit card, your monthly payments or even your balance, then getting a loan or taking out a mortgage scares us more than it should scare you.