Credit Cards & Loans
A fifth of Brits don’t know the difference between credit and debit cards
One in five Brits cannot explain the difference between a credit card and a debit card, while 11% do not know what an ATM is, according to a new report.
The survey of more than 1,600 UK adults by MyVoucherCodes.co.uk highlighted just how confusing many people find various personal finance terms they hear on a daily basis.
More than a fifth of respondents admitted they couldn’t specify what the different was between a credit and a debit card, despite the latter being a method of payment with the user’s own money and the former being borrowed funds, usually with a charge on top.
‘APR’ was also something people struggled to get to grips with – 62% said they did not know what APR (Annual Percentage Rate) meant or stood for.
More than half (58%) admitted they did not know what ‘PPI’ (Payment Protection Insurance) was or stood for, despite the recent mis-selling scandal.
Eleven per cent of people also claimed to not know what an ‘ATM’ (Automated Teller Machine or cash point) was and 71% said that they were unsure what an ‘ISA’ (an Individual Savings Account) was.
Everyone taking part was asked if a lack of knowledge about certain banking terms had ever been a disadvantage for them, to which 32% said ‘yes’. A further 55% of respondents said that they felt their bank didn’t explain terms to them properly.
Mark Pearson, chairman of MyVoucherCodes.co.uk, said: “I think banks can sometimes be somewhat guilty of throwing these confusing terms and abbreviations around and just assuming that customers will know what they mean.
“With ATMs, ISAs, APRs and PPIs being dropped into conversations everywhere, it’s no wonder there’s some confusion. What was most worrying for me was that some Britons didn’t know what the difference between a credit and debit card was; that’s something everyone should be clear on, or else they could end up in hot water!”
“However, I think it’s important that consumers make it their business to know what these terms mean. After all, they are terms that probably involve of affect most people. If you have a loan or credit card, for example, you should know what APR is so that you can be clear how much you’ll owe back. Don’t always rely on your bank to educate you!”
