Can You Answer These 5 Basic Questions About Your Finances? Analyzing the Black Box of Personal Finance.
What is a subprime mortgage? What is a FICO score and what role does it play in getting a loan? What is 1% of $50,000? When you need quick cash, do you overdraft a check, wire money, get a credit card advance or apply for a short-term payday loan? How much time would it take to pay off your credit cards by only making minimum payments?
If you had trouble answering these questions you join over half of Americans surveyed by The Center for Economic and Entrepreneurial Literacy (CEEL) who could not correctly identify these much-discussed financial topics. Whether it is fear of the unknown or a 'don't fix it unless it's broken' mentality, not knowing basics of personal finance can put you in a tough spot it in this tough economy.
The CEEL is reminding consumers to read the fine print to avoid new bank fees and charges. With U.S. banks estimated to take in over $38 billion in fees this year, you can bet that any new changes to your bank's policies might affect your bottom dollar. So keep your eyes peeled for increased overdraft fees, higher credit card late fees, and a bump in ATM use fees.
While we experience this marked downturn in the economy and unemployment rates, it may be just the opportunity to become better informed and fill up your pool of knowledge on personal finance issues. With a plethora of information immediately available at your fingertips and a host of local and federal resources, there really aren't many barriers for the savvy consumer to become a savvy personal finance specialist.
And to start your financial re-education, below are a few popular phrases and definitions.
FICO score - A type of credit score that makes up a substantial portion of the credit report that lenders use to assess an applicant's credit risk and whether to extend a loan. FICO is an acronym for the Fair Isaac Corporation, the creators of the FICO score. (from the www.investopedia.com dictionary)