FINRA recently conducted a study called the FINRA Investor Education National Financial Capability Study. The FINRA Investor Education Foundation is the largest foundation in the United States dedicated to investor education. This study used data from an online survey of 28,000 people and was conducted in 2009.
According to this study, women with low levels of financial literacy made more costly credit card behaviors than men with low financial literacy levels. Examples of costly credit card behaviors are carrying a balance, paying late fees, paying only the minimum balance, and lack of comparison shopping for cards. On the other hand, there were no difference in male and female behavior for those with high financial literacy.
Credit Card Behavior
29 percent of males with low levels of financial literacy were more likely to engage in problematic credit card behaviors, compared to 32 percent of females with low literacy. This was a 10 percent difference.
24 percent of both men and women with high levels of financial literacy were likely to engage in problematic credit card behaviors. There was no difference in this category. Literacy was the key to there being no difference.
29 percent of male responders with low levels of financial literacy had problematic credit card behavior, compared to 24 percent of males who had high levels of literacy – a 5 point difference or 17 percent difference.
32 percent of female responders with low levels of financial literacy had problematic credit card behavior, compared to 24 percent of females who had high levels of literacy. This was a five- point difference or 25 percent difference. Literacy had a greater impact on behavior for females.
Credit card interest rates
Females pay half a percentage point more in credit card interest rates than men, regardless of financial literacy level. Since the study accounted for the effects of important demographic characteristics like age, education and income – more research is needed to explain this.
Both men and women with low levels of financial literacy pay more in credit card interest rates than those with high financial literacy
Although the half percentage difference in credit card interest rates between men and women is not a large difference, this can make a difference over a lifetime.
Late Fees and Cash Advance
23 percent of male responders were charged a late fee, compared to 26 percent of female responders. This was a 26 percent difference.
Women were less likely than men to take a cash advance
“For women, having a high level of financial literacy appears to pay off,” said FINRA Foundation President Gerri Walsh. “The gender gap for costly credit card behaviors disappears for women with high levels of financial literacy, and after controlling for demographic characteristics like age and income. Becoming more financially literate is a great step that any woman can take to keep more of her hard-earned money in her pocket.