CINCINNATI, April 29, 2016 /PRNewswire/ -- We've seen the news and read the reports: Americans are poorly educated in money management. But is this dim outlook on our nation's financial literacy accurate?
In recognition of Financial Literacy Month, celebrated annually in April, Fifth Third Bank (NASDAQ: FITB) commissioned a survey to examine the financial beliefs and behaviors of American adults. Results showed a true understanding of financial concepts, most notably revealing one in four Americans has successfully achieved a debt-free lifestyle. Additional insights from the study debunk three common myths about our nation's financial literacy:
Myth 1: Americans lack basic financial knowledge.
According to the study, Americans are well educated on financial terminology and best practices.
- 87 percent of survey respondents know APR is an acronym for annual percentage rate, a key element in loans and credit decisions.
- 74 percent recognize DTI as the debt to income ratio, an indicator lenders use to determine loan approval.
- 45 percent of Americans know they should set aside 20 percent of their income for savings.
Myth 2: Americans can't handle their credit card debt.
While 62 percent of our nation faces credit card debt, survey results reveal Americans have the knowledge to effectively manage and pay off balances.
- 85 percent of survey respondents know how to positively impact their credit score.
- Two-thirds1 of respondents correctly identify 30 percent as the suggested amount of credit availability to utilize.
- More than half2 of Americans know to avoid larger long-term payments by organizing debt priorities from the highest interest rate to the lowest.
Myth 3: Millennials are struggling to gain financial independence.
When it comes to finances, the millennial generation, ranging in age from 19 to 35, is often stereotyped as impulsive and dependent. Survey results sharply contrast this claim.
- Less than one-third3 of millennials depend on their parents for financial support.
- 36 percent say they are completely financially independent.
- Nearly half4 of American millennials have at least two months of living expenses saved.
"It's encouraging to see Americans are generally knowledgeable about basic finance concepts," said Jada Grandy, senior vice president and Community Reinvestment Act strategies director at Fifth Third. "There's still a long way to go in terms of transferring that knowledge from concept to practice, but with an understanding of best practices and a will to achieve independence, Americans are on the right track to financial empowerment."
In a commitment to support nationwide financial literacy, Fifth Third created its Top Ten Steps to Financial Empowerment, available at www.53.com/life. The Bank is dedicated to financial empowerment and offers its free L.I.F.E. (Lives Improved through Financial Empowerment®) programs to consumers through many ages and stages of life.
About Fifth Third Bank
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $141 billion in assets and operates 1,254 full-service Banking Centers, including 95 Bank Mart® locations, most open seven days a week, inside select grocery stores and 2,593 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors. Fifth Third also has an 18.3% interest in Vantiv Holding, LLC. Fifth Third is among the largest money managers in the Midwest and, as of December 31, 2015, had $297 billion in assets under care, of which it managed $26 billion for individuals, corporations and not-for-profit organizations. Investor information and press releases can be viewed at www.53.com. Fifth Third's common stock is traded on the NASDAQ® Global Select Market under the symbol "FITB." Fifth Third Bank was established in 1858. Member FDIC
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1 65.7 percent of respondents know 30 percent is the recommended amount of available credit to utilize.
2 50.9 percent of respondents know to pay debt from the highest interest rate to the lowest interest rate.
3 30 percent of millennial respondents are financially dependent on their parents.
4 47 percent of millennial respondents have at least two months of living expenses saved in an emergency fund.
SOURCE Fifth Third Bank