Human Resources & Payroll
Good News: 25% of Americans are Debt-Free
According to a recent study from Fifth Third Bank, one in four Americans are debt-free.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 ...
May. 02, 2016
Good news sometimes seems hard to find when it comes to individual savings, debt and spending, but here’s a bright spot: A new survey shows that one in four Americans has successfully achieved a debt-free lifestyle.
In recognition of Financial Literacy Month, Fifth Third Bank commissioned the survey to examine the financial beliefs and behaviors of American adults. Results showed a true understanding of financial concepts, and it debunked 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.