UK financial knowledge is worryingly low with many confused by the complexity of the current system.
One In 5 UK Adults Thinks The Queen Sets Interest Rates
Levels of financial literacy are worryingly low in the UK with many struggling with the complexity of the current system, according to Opinium research commissioned by Tally – a new everyday currency that uses gold to protect savings.
Levels of understanding are poor across the generations but younger people struggle most when it comes to the basics of how money works.
More than a third (35%) of UK adults did not know how interest rates are set. Some thought the Queen played a role (18%), and 15% thought the Prime Minister could dictate interest rates. For the 18-24-year-old age bracket, a staggering 60% opted for a wrong answer or simply didn’t know how interest rates are set.
Worrying Lack of Financial Literacy
The research also showed a clear lack of understanding when it comes to how banks work and the impact another financial crisis could have on savings.
The majority of those surveyed (84%) were unaware that deposits not covered by the Financial Services Compensation Scheme can be legally taken from customer accounts to fund a failing bank’s restructure (as opposed to being funded by taxpayers in a bail-out). Over half (58%) thought this was false and a quarter (26%) said they didn’t know. And 63% believed UK banks were automatically protected by the Government from global financial volatility.
When it came to understanding inflation, many of those surveyed were left scratching their heads. More than one in five did not know what inflation was, rising to almost half (46%) of 18-24 year-olds. And 46% of all Brits don’t know what determines the value of money.
Cameron Parry, Founder and CEO of Tally, said: “Given the lack of simple and clear information on the subject, it’s unsurprising that many people have a limited understanding of how the banking system in the UK actually works and how it affects them.”
“More needs to be done in schools and generally to educate people on how the current financial system works and what risks they are inadvertently exposed to. This is particularly important in today’s world where we are starting to see new options for using an alternative currency, which the financially savvy are capitalising on.
Tally is a breakthrough currency representing physical gold, supported by a savings and payments platform that works with the incumbent banking system’s infrastructure, making it familiar and easy for everyday use.
A Tally Account works in a similar way to a bank account, meaning you can transfer money in, save, send, and spend through the app, or use the Tally Debit Mastercard for point-of-sale purchases or to withdraw cash at an ATM. But it is not subjected to the same risks as traditional banking because it is not denominated in government-issued fiat currency.
“Not everyone will choose a commodity currency such as tally, but at least there is now a choice in the type of money we can use for our savings and everyday payments.”