One-in-ten adults would fail simple personal finance exam

As many as 4.7 million or one-in-ten British adults would score less than 40% in a simple personal finance examination, falling short of the equivalent to a GCSE grade C2 and failing to achieve an O’ Level pass, according to recent research by Abbey Current Accounts.

Abbey arranged for 1031 adults to answer 10 simple questions taken from a past examination paper with an equivalent level difficulty to a GCSE. It is launching the results during GCSE results week to highlight the absence of basic personal finance skills amongst British adults.

Based on the results, one-in-four adults (25 per cent) were heading for an A*, and 30 percent a straight A. 21 per cent were on for a more respectable B, while 13% only achieved a C grade – worrying given the questions Abbey selected were those that everyone with a bank account should know.

The average score for adults was a B (60%). Average scores were the same for both genders - although two percent more females scored an A* than males.

Government plans to introduce personal finance skills into the Maths GCSE should certainly be welcomed by 18-24 year olds, since they fared worst with an average score of 50 percent – the equivalent to a GCSE grade C.

The top five wrong answers were:

86 per cent didn’t know that they get six weeks to pay back a credit card before it accrues interest.

47 per cent failed to explain that negative equity is where your mortgage is larger than the value of your house. 36% thought it was when your house is worth less than price you brought it at.

44 per cent didn’t know that the UC on a bank statement stands for Unpaid Cheque.

23 per cent were unaware that failure to pay a secured loan meant that your house could be sold to pay for the loan. 7% thought that it involved selling off the contents of your house.

12 per cent don’t know what hire purchase means – 10 per cent assumed it was hiring goods instead of buying them.

Steve Shore, Head of Banking at Abbey, commented: “'While most people are in the realms of a GCSE pass almost five million British adults would fail a simple personal finance exam. Quite worrying given we selected questions that we felt everyone with a bank account should know. Abbey certainly welcomes the government’s plans to introduce a much-needed personal finance element into the curriculum. We would also urge anyone who doesn’t understand something on their bank statement to contact their branch or a financial adviser.”