Banking jargon continues to confuse savers and many are failing to understand common phrases, according to new research released by Aldermore today.
Aldermore asked savers to correctly identify the meaning of everyday savings acronyms. Almost six in ten (59%) failed to identify AER as Annual Equivalent Rate, while only half (54%) correctly identified the ISA as an Individual Savings Account.
Savers were also asked to identify the correct amount of gross interest earnt from placing £100 into a two-year fixed rate savings account paying 3% per annum. Just under a third (32%) worked out they would earn £6.09. Almost three-in-ten suggested it was £6.
The research also highlights what effect this lack of understanding has on their ability to save. While just under a third (32%) said they fully understood how savings account work and what they’re likely to earn, 31 per cent said they put money away because they think it’s important, but don’t fully understand the terminology.
When it comes to finding out more information, two-thirds say finance websites are the most likely source they would turn to if they wanted to understand savings accounts better. While almost two-fifths (37%) would go to their local bank or building society branch, just under a third (31%) suggested they would speak to friends or family.
Interestingly, almost four in ten (38%) savers said in the event of them being unable to find sufficient information they would move their savings elsewhere. Only four per cent said it would stop them from saving altogether.
Simon Healy, Aldermore’s Group Managing Director, Savings, said:
“Savings products should be easy to understand and easy to open. This research shows that many savers don’t fully understand all the language around their accounts and could ultimately be missing out on better returns. It is pleasing to see many are turning to online personal finance websites who not only provide a great resource, but highlight the best deals in the savings market too.
“As part of our aim to help customers realise their ambitions, we have put together a ‘Savings Glossary’ to help them understand what things mean and to help ensure they get the most from their money.”
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