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October 14, 2014
Highest-scoring consumers are also the most satisfied and engaged with their bank
SAN JOSE, Calif.—October 14, 2014—A comprehensive survey of U.S. bank customers conducted for FICO (NYSE:FICO), a leading predictive analytics and decision management software company, found that 30 percent of consumers got a passing grade when it came to knowledge of their financial rights. In the survey, consumers were asked 12 questions about their banking rights. Out of nearly 1,000 respondents, only 1 percent got an A (with 92 percent correct), 3 percent got a B (83 percent correct), 12 percent got a C (with 75 percent correct) and 14 percent got a D (with 67 percent correct).
As a group, younger consumers fared worse than their parents' generation. Only 48 percent of Millennials (aged 25 to 34) could answer half the questions correctly, while 57 percent of Generation X (35-50) and 62 percent of those over 50 years old answered more than half of the questions correctly.
Consumers, who answered nearly 50 percent of the questions correctly, were also more satisfied and engaged with their primary banks than those who did not. The consumers who were most satisfied with their banks answered on average 47 percent of the questions correctly and the consumers who were most engaged with their banks answered 50 percent correctly. In contrast, unengaged consumers answered only 42 percent of the questions correctly, and unsatisfied consumers answered only 40 percent of the questions correctly.
"The study showed a correlation between financial literacy and better customer engagement, more use of bank services and decreased likelihood to switch banks," said Anthony Sprauve, senior consumer credit specialist of FICO. "Educating consumers, especially Millennials, about their financial rights makes good business sense. Basic financial literacy equips consumers with the knowledge and confidence they need to make responsible financial decisions at all stages of their lives."
Consumers were better informed on several topics. 73 percent of respondents knew they have the right to dispute inaccurate or incomplete data on their credit report. 69 percent knew that if their bank fails, their savings/checking account is protected by the federal government. 69 percent knew that information on Annual Percentage Rates (APRs) and annual fees must be included on applications for new credit cards. 60 percent knew their bank must send them information if a rate increase occurs on their adjustable rate mortgage. 57 percent knew that their bank must send information about annual fees prior to renewal of a credit/charge card. And 55 percent knew that if they are denied a credit card or auto loan, their bank must send them written notification explaining the reasons for the denial.
Consumers were stumped on a broad range of topics. 81 percent thought a Credit Reporting Agency (CRA) did not need their written consent in order to provide their credit report to their employer. 79 percent did not know that debit card transactions are protected by the federal government. 78 percent did not realize that consumer information agencies can report negative information that is more than three years old. 75 percent did not know that while settling credit-related disputes, their credit rating is protected by the government. 74 percent of consumers thought they could always get access to their files at a CRA for free. Half of respondents did not know that if they are denied credit, they can receive a free credit report within 30 days of denial.
The survey of nearly 1,000 U.S. banking customers was conducted online between March 5 and March 15, 2014. Two FICO websites –www.scoreinfo.org and www.myfico.com – provide consumers with free educational information to help them build a strong foundation for their financial house.
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 90+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company's groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption. These include the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health.
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