Keeping on top of your personal finances is an important responsibility, and for many it can be quite overwhelming. With new financial technology constantly developing, many Brits face the worry of being left in the dark about their finances.
Interested in just how confident Brits are in their understanding of essential finance terminology, Uswitch.com conducted a Likert-scale survey among 3,972 Britons, asking them to what extent they understood some of the most essential financial terms. Only 4% of Britons were confident in their understandings of ‘Blended Finance’ and ‘Cornerstone investment’, making them the most confusing financial terms for Brits.
The next most confusing terms are ‘Social enterprise’ and ‘Fintech’ at 13%. ‘Fintech’ is an abbreviation for financial technology and encompasses assets like mobile banking. ‘Bridging loan’ is in third from the bottom with only 14% of Brits confident in their understanding of the term; bridging loans are a short-term finance option specifically for buying property.
‘CHAPS’ and ‘Hedge fund’ are next, at 18%, whilst ‘Annuity’ ranks fifth with 20% of Brits confident they understood its meaning.
The next most confusing term is ‘AER’ at 23%. Standing for ‘Annual Equivalent Rate’, it is the official rate for savings accounts.
‘Equity Loan’ is the least confusing term from this data set at 27%. It is somewhat worrying that perhaps another 73% do not understand its definition.
The Finance Terms Confusing Brits the Least
Uswitch.com found that 78% of Britons were confident in their understanding of the term ‘Pension’, making it the least confusing financial term.
The second least confusing term is, thankfully, ‘Interest rates”. With 76% of Britons confident of what exactly it means, it is a reassurance that Brits understand this considering how important interest rates are for credit scores and mortgage applications.
In third place is ‘Crowdfunding’ at 73%, an innovative way to raise money for personal projects and new businesses that relies on the good natures of others.
‘Credit Score’ scores fourth, with 71% of Brits confident in the definition, whilst ‘ISA’ (Individual Savings Account) lands in fifth place at 68%.
‘Investing’ ranks sixth at 64%, followed by ‘Stock’ at 61%.
Rounding off the top 10, in eighth place is ‘Net worth’, with 59% of Brits’ confident in its meaning. Net worth is defined as the total value of assets a person owns. ‘Repossession’ is in ninth place, at 56%, whilst ‘Depreciation’ finishes in 10th place at 55%.
Uswitch.com further analysed average monthly search volumes within the UK for questions relating to the definition of each financial term.
The most searched for term is ‘stamp duty’, with 37,540 average monthly searches for questions relating to its meaning. For example, the question ‘what is stamp duty’ has a whopping 7,300 average monthly searches alone!
Other commonly searched-for phrases include ‘what is a recession (6,800) ‘what is APR’ (5,700), and ‘what is cryptocurrency’ (2,400).