New Study Finds Financial Literacy Boosts Credit Scores, Cuts Bankruptcy
CHICAGO, April 4, 2011 /PRNewswire-USNewswire/ -- The Federal Reserve Bank of Chicago and Visa Inc. convened a summit today on financial literacy moderated by CNBC Anchor Maria Bartiromo and featuring Visa Chief Financial Officer Byron Pollitt and Ariel Investments Chief Executive Officer John W. Rogers, Jr.
The fifth annual Financial Literacy and Education Summit brings to Chicago global experts to explore the role that government plays in improving financial literacy.
At the summit, Visa released the results of a study showing that college students who took an online tutorial on the wise use of credit before being issued a credit card had dramatic improvements in their financial behavior.
Students who completed the tutorial had an average revolving monthly balance that was 20 percent lower than their peers, while the 60-day delinquency rate on their accounts was 45.1 percent better. Just as significant, the rate of increase in their FICO credit score was 240 percent better and they had a 51.2 percent improvement in the bankruptcy rate.
The study was based on data provided by Wells Fargo Card Services that looked at the behavior of college students who took Visa's online financial literacy tutorial during the height of the recession in the first half of 2009.
Visa also made public the results from a national survey conducted last week that found American parents are clamoring for their children to learn about money management in school. According to the survey, 85 percent of parents said they want a course in personal finance to be a high school graduation requirement. Only four states currently have that requirement.
"These results show that the right financial education, delivered at the right time, in the right way, can have a major impact," said Pollitt. "American parents are rightly demanding that financial literacy be taught in our schools."
"The public-private partnership between the Federal Reserve Bank of Chicago and Visa in hosting this Summit is a model on how we can improve financial literacy in the United States," said Charles Evans, President and Chief Executive Officer, Federal Reserve Bank of Chicago.
"We are living in an increasingly complex financial world," said Bartiromo. "Improved financial literacy is a necessary ingredient in restoring confidence, and ensuring long-term prosperity."
Visa also announced the launch of two new financial video games to add to their arsenal of effective and free educational tools. Money Metropolis and Peter Pig's Money Counter have been designed to help children, ages of five to twelve, learn how to identify and count coins, make a budget, earn, save, and spend responsibility.
Summit participants include:
- Byron Pollitt, Chief Financial Officer of Visa Inc.
- Maria Bartiromo, Anchor of CNBC's Closing Bell
- John W. Rogers, Jr., Chair of President Obama's Advisory Council on Financial Capability and Chairman, CEO & Chief Investment Officer of Ariel Investments
- Charles L. Evans, President & CEO of the Federal Reserve Bank of Chicago
- Ian H. Solomon, U.S. Executive Director of The World Bank
- Rosie Rios, U.S. Treasurer
- Janet Bodnar, Editor of Kiplinger's Personal Finance Magazine
- Carrie Schwab-Pomerantz, Member of President Obama's Advisory Council on Financial Capability and President of the Schwab Foundation
- Richard G. Ketchum, Member of President Obama's Advisory Council on Financial Capability and Chairman & CEO of the Financial Industry Regulatory Authority
- Roland A. Arteaga, Member of President Obama's Advisory Council on Financial Capability and President and Chief Executive Officer of Defense Credit Union Council
- Ted Beck, Member of President Obama's Advisory Council on Financial Capability and President & CEO of the National Endowment for Financial Education
The summit can be viewed online at: www.practicalmoneyskills.com/summit2011.
About the Federal Reserve Bank of Chicago
The Federal Reserve Bank of Chicago is one of 12 regional Reserve Banks that, along with the Board of Governors in Washington, DC, make up the nation's central bank. The Chicago Reserve Bank serves the Seventh Federal Reserve District, which encompasses the northern portions of Illinois and Indiana, southern Wisconsin, the Lower Peninsula of Michigan, and the state of Iowa. In addition to participation in the formulation of monetary policy, each Reserve Bank supervises member banks and bank holding companies, provides financial services to depository institutions and the U.S. government, and monitors economic conditions in its District.
About Visa Inc.
Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable digital currency. Underpinning digital currency is one of the world's most advanced processing networks—VisaNet—that is capable of handling more than 20,000 transaction messages a second, with fraud protection for consumers and guaranteed payment for merchants. Visa is not a bank, and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: Pay now with debit, ahead of time with prepaid or later with credit products. For more information, visit www.corporate.visa.com.
SOURCE Visa Inc.