Financial literacy and consumer credit portfolios

Richard Disney and John Gathergood

Journal of Banking & Finance, 2013, vol. 37, issue 7, 2246-2254

Abstract: We use survey data from a sample of UK households to analyse the relationship between financial literacy and consumer credit portfolios. We show that individuals who borrow on consumer credit exhibit worse financial literacy than those who do not. Borrowers with poor financial literacy hold higher shares of high cost credit (such as home collected credit, mail order catalogue debt and payday loans) than those with higher literacy. We also show that individuals with poor financial literacy are more likely to lack confidence when interpreting credit terms, and to exhibit confusion over financial concepts. They are also less likely to engage in behaviour which might help them to improve their awareness of the credit market.

Keywords: Financial literacy; Consumer credit; Debt portfolios (search for similar items in EconPapers)
JEL-codes: D12 D14 E21 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (109)

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Related works:
Working Paper: Financial Literacy and Consumer Credit Portfolios (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:7:p:2246-2254

DOI: 10.1016/j.jbankfin.2013.01.013

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