UK Report: British Consumers Perplexed By Banking Language

British consumers might be able to explain the difference between apples and oranges, but explaining the difference between credit cards and debit cards? Not likely.

It’s hard to believe, but a new study cited in YourMoney.com reported that one-in-five Brits don’t understand the difference between a credit card and a debit card. The study surveyed over 1,600 adult consumers in the UK, and illustrates the increased consumer confusion incurred by the complexity of personal financial terms they hear almost everyday.

Pardon?

Respondents admitted they couldn’t specify how credit and debit cards operate or explain the different services they each provide.

APR (Annual Percentage Rate) was another term that participants claimed they often struggle with. Sixty-two percent said they had no idea what it means or what the acronym stood for. Over half of the consumers (about 58 percent) indicated that the recent mis-selling scandal in the country’s high street banks went right over their head, and admitted they had never heard of PPI (Payment Protection Insurance). 

The majority of respondents (71 percent) said they didn’t know what ISA (Individual Savings Account) meant.

Fair enough.

However, the study’s most surprising finding may be that 11 percent of Brits freely admitted they didn’t know what an ATM (Automated Teller Machine, or a cash point as its commonly called in the UK) was.

Where Does The Confusion Stem From?

“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,” stated Mark Pearson, chairman of MyVoucherCodes.co.uk, the company behind the study.

Consumers who took part in the survey were asked if their lack of understanding in financial and banking terminology had any consequences. Thirty-two percent responded, “yes”, and reported it was a huge disadvantage at times. Fifty-five of Brits went on to reveal that they felt UK banks were doing a poor job of explaining these terms adequately.

Pearson commented that consumers can’t rely on high street banks to help with banking terms. He said it was imperative for Brits to take the initiative to educate themselves.

“With ATMs, ISAs, APRs and PPIs being dropped into conversations everywhere, it’s no wonder there’s some confusion. 

Pearson added, “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!”

To read the full article at YourMoney.com click here.