WTF is APR? Half of Brits don’t know…

Do you know what APR means? How about BACS? Or compound interest? If you don’t, you’re not alone. Two in three Brits (65%) claim to know what APR means, but only half (50%) can properly define it.

 
Among the 2,000 consumers surveyed by Definition Group, most (83%) said they could explain ‘inflation’, but when tested, only 57% picked the real definition from a list. Six in ten (63%) said they could explain BACS , but only two fifths (43%) defined it correctly. Just half (51%) could correctly identify what pay growth means.

The findings come as the FCA is introducing the new Consumer Duty. The duty requires any company offering a financial product, including payment plans, to explain it in simple English.

Jargon has serious consequences: 35% of people who are struggling have made a financial mistake because they didn’t understand the wording. A third (33%) of people who’ve bought something on credit ended up paying more than they expected.

A quarter (24%) of those with disabilities say that their bank doesn’t communicate clearly. Unfortunately, this group is twice as likely to make a mistake with their finances because they did not understand the wording.

Financial jargon is especially tough on people who are under stress from other important commitments. Over half (55%) of parents to children with disabilities have opted into a financial service they did not need because they misunderstood the terms – that’s three times as many as the 18% of parents to children without disabilities.

Neil Taylor, Founder of Definition Group’s language consultancy Schwa, said: ‘It’s not just you: financial jargon really is hard to understand. Worse, it’s unfair. You shouldn’t need a dictionary to buy something or read an email from your bank, and the FCA agrees. It’s businesses’ responsibility to give you the information you need in a format you can understand.’