Survey finds Americans are starting to master the art of managing daily finances but continue to fall short when it comes to protecting their credit
MCLEAN, Va., Oct 05, 2006 (BUSINESS WIRE) -- Despite the fact that almost six out of 10 Americans consider
themselves "very" or "highly" knowledgeable when it comes to personal
finance, the second annual survey of America's IQ on personal finance
from consumer advocacy group Consumer Action and leading financial
services provider Capital One (NYSE:COF) finds that Americans are
still in need of a dose of fiscal fitness. The national survey of
1,003 men and women reveals that Americans are making strides when it
comes to managing their daily finances. However, as with the survey's
initial findings in 2005, many are still not taking steps to protect
and improve their credit scores, despite the fact that Americans' have
had access to free copies of their credit reports for over a year now.
The 2006 survey found that:
-- Americans' ability to stay on top of daily financial matters
has improved. Sixty-five percent use budgets regularly - a
positive sign and slight improvement from last year (64
percent). Americans also show improvement when it comes to
sticking to their budgets - sixty-six percent report that they
maintain the budgets they create, compared to only 60 percent
-- Americans continue to fall short in taking steps to protect
their credit. Twenty-seven percent of Americans have never
checked their credit report - a four percent increase from
"The good news from this survey is that Americans are getting
better when it comes to managing their day-to-day finances, such as
using budgets and checking account balances frequently. It's equally
important, however, for people not to overlook other important
financial tasks, like regularly checking their credit reports," said
Diana Don, director of financial education at Capital One.
Americans are exercising greater control over their daily
finances, but improvement is needed.
The Capital One-Consumer Action survey finds that Americans'
financial habits are good, particularly when it comes to keeping track
of expenses. More than six out of 10 Americans are using budgets
regularly and two-thirds (66 percent) report that they stick to their
budgets and modify them rarely or if unexpected expenses arise. An
additional 54 percent of Americans report that they are checking
banking and credit account statements more than once a month.
But problems remain. More than a third (35 percent) of Americans
still do not use budgets regularly - only a slight improvement from
the 36 percent who reported the same last year. Age groups that are
the least likely to budget include younger Americans, aged 18- 29 (36
percent do not use budgets), and older Americans, aged 60-70+ (47
percent report they do not use budgets).
Capital One and Consumer Action strongly encourage consumers to
develop personal budgets to meet their short and long-term financial
goals. Following are tips consumers can use to get started.
-- Establish your financial goals - Before creating a budget, you
must first consider and establish your own financial goals.
Short-term goals could include setting aside money to cover
regular household expenses or saving toward an annual family a
vacation. Long-term financial goals might include planning for
retirement or saving for a second home.
-- Develop a realistic budget that you can stick to - Create a
budget that captures all of your household expenditures,
including setting aside money for saving. This ensures you are
in control of your financial situation and on track to meet
your financial goals.
Americans fall short when it comes to protecting their credit.
Credit scores are also an important indicator of your financial
well-being - the higher your credit score, the more likely you are to
be approved for loans and receive favorable rates. Experts agree that
checking your credit report for errors is the best line of protection
against identity theft, credit card fraud and other growing crimes
such as phishing and skimming. Yet, for the second year in a row, the
Capital One-Consumer Action study reveals that many people don't
regularly obtain their credit reports. Twenty-seven percent of those
surveyed reported that they have never checked their credit report -
an increase from the 23 percent who reported the same last year. An
additional 20 percent admit to only checking their report when making
a large purchase. Despite the availability of a free annual credit
report from each of the major reporting agencies, 47 percent of
Americans are unaware that the reports are free of charge.
"What many people don't realize is that landlords, insurance
companies, and employers - not just banks - check credit records,"
said Ken McEldowney, Executive Director of Consumer Action. "Your
credit score can impact your ability to get a loan, a job, and even
rent an apartment, so it's important to regularly obtain a copy from
each of the three major credit bureaus and check each for accuracy.
Reports are easier than ever to obtain and cost nothing. It's
startling that many Americans are still not taking advantage of this
Consumer Action and Capital One offer these tips consumers can use
to protect and improve their credit.
-- Correct any mistakes on your credit report - Credit reports
can contain mistakes and it's your responsibility to correct
them by contacting each of the three major credit reporting
bureaus - Equifax, TransUnion and Experian.
-- Protect against identity theft by checking your credit report
- Regularly checking your credit report is one of the best
ways to protect against identity theft and credit fraud.
Consumers are eligible for one free credit report every year
from each of the three major credit reporting agencies. Copies
can be requested online at www.annualcreditreport.com or by
MoneyWi$e program arms consumers with financial tools and
Education is the key to a healthy financial future. To help
consumers, Capital One and Consumer Action created the MoneyWi$e
financial education program. MoneyWi$e combines free, multilingual
financial education materials with community training and seminars to
give consumers at all income levels the information and the practical
assistance they need to make smart financial choices. The MoneyWi$e
series includes a number of free, multilingual brochures on a variety
of personal finance topics, including improving and rebuilding credit,
budgeting, and saving and investing. Consumers can obtain free
brochures by visiting www.money-wise.org.
For Capital One's Financial IQ study, Braun Research was engaged
to conduct 1003 interviews with adults age 18 years of age or older
across the United States. Surveys were conducted by telephone from
August 29th through August 31st, 2006. The margin of error for the
research project is plus or minus 3.1 percentage points. Interviews
were monitored and verified at random. Sampling for this study was
conducted using a national probability sample of all exchanges and
area codes known in the continental United States. All interviews were
conducted using a computer assisted telephone interviewing system.
Statistical weights were designed from United States Census Bureau
About Capital One
Headquartered in McLean, Virginia, Capital One Financial
Corporation (http://www.capitalone.com) is a financial holding
company, with more than 324 locations in Texas and Louisiana. Its
principal subsidiaries, Capital One Bank, Capital One, F.S.B., Capital
One Auto Finance, Inc., and Capital One, N.A., offer a broad spectrum
of financial products and services to consumers, small businesses and
commercial clients. Capital One's subsidiaries collectively had $47.2
billion in deposits and $108.4 billion in managed loans outstanding as
of June 30, 2006. Capital One, a Fortune 500 company, trades on the
New York Stock Exchange under the symbol "COF" and is included in the
S&P 500 index.
About Consumer Action
Consumer Action is a national non-profit education and advocacy
organization founded in San Francisco in 1971. Consumer Action serves
consumers nationwide by advancing consumer rights, referring consumers
to complaint-handling agencies and publishing multilingual educational
materials. Consumer Action also advocates for consumers in the media
and before lawmakers and annually conducts comparison surveys for
consumers on credit cards, banking issues and telecommunications
SOURCE: Capital One Financial Corporation
Capital One Financial Corporation
Diana Don, 703-720-2371