Since restrictions have lifted, money has been on the brain.
Most of us are thinking about how to budget for our resuming social lives – following months of limited spending.
But, according to a new survey, lots of young adults have been using the past year to improve their personal finance knowledge.
New research, from Hitachi Capital UK, says that more than half (51%) of 18-34-year-olds improved their financial literacy during the lockdowns – with two fifths (42%) stating that their understanding of finance products and services has improved.
What’s more, more than half also say they’re now confident in their new financial knowledge.
It looks like Londoners led the way with this growth, with 49% spending the extra time at home to get a better handle on their own financial situation. The highest number recorded in the whole of the UK.
But there are still areas of finance that young people remain unsure about.
Two-thirds (66%) of those surveyed said they did not realise that taking a personal loan payment holiday could increase the overall cost.
Similarly, 30% of 18-34-year-olds incorrectly thought that APR on a personal loan is higher when borrowing larger sums of money. But, the truth is, APR can sometimes be lower for borrowing larger amounts.
There were also gaps in knowledge around credit scores – something that’s vital for getting a mortgage.
More than half (53%) of 18-34-year-olds surveyed were unaware that applying for multiple credit at the same time could damage their credit score and reduce their chances of acceptance.
It seems that some don’t look into the details of personal finance agreements either – with 8% of millennials and Gen Z admitting they don’t take the time to understand the terms.
Vincent Reboul, managing director of Hitachi Capital Consumer Finance, says: ‘It’s positive that so many people have used this time during the pandemic to become financially savvier, and encouraging that younger age groups now have a better understanding of consumer finance products.
‘But as the survey highlighted, misplaced confidence can lead to common misconceptions about how products work, which is why it’s important to take the time to understand the implications and ask questions.’
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