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Financial literacy worsens among Brits

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Despite personal finance issues taking centre stage over the past 12 months, research from Abbey Banking has found that financial literacy among British adults has declined since this time last year.

In August 2007, Abbey set a simple GCSE level personal finance exam among a representative group of adults, and found that one in 10 (5.9 million) would fail to achieve the 40% mark needed to achieve grade GCSE grade C.

One year on, a repeat of the exercise shows that the number of adults failing to achieve a grade C has increased by 1.2 million adults to one in seven. At the top end of the scale, one in four adults matched last year’s results by scoring an A*, but straight As were down on last year by 2% to 28%.

Government plans to introduce personal finance skills into the Maths GCSE should certainly be welcomed by 18-24 year olds, since they slipped from an average score of 56%in 2007 to 53% in 2008.

The main areas were those examined fell down were not knowing that you get six weeks to pay back a credit card before it accrues interest and a failure to understand negative equity.

Steve Shore, Abbey Banking director, said: “While most people are in the realms of a GCSE pass, the failure rate has increased by over one million. Quite worrying given that the credit crunch and cost of living has dominated the front pages for the past 12 months and people say that they are more interested in understanding their finance than ever before.”

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