Many Irish consumers have low understanding of credit and borrowing

 

Bank of Ireland introduces new borrowing tool and learning hub to help compare overdrafts, credit cards and loans

  • Financial Wellbeing Index indicates low understanding of credit and borrowing
  • Just 19% of consumers understand how to limit the interest paid on a credit card
  • Unique new borrowing tool helps customers decide on the right credit for their needs

Research shows that many Irish consumers have low understanding of credit and borrowing. According to Bank of Ireland’s Financial Wellbeing Index*, when it comes to understanding of credit options available to consumers, which includes personal loans, overdrafts, credit cards and credit card instalment plans, on average almost half (47%) of questions were answered incorrectly in a financial literacy test.

While 62% of people knew the effect of interest on their monthly loan payments, just one in five (19%) consumers understood how to limit the interest paid on a credit card. Bank of Ireland has introduced a new online calculator to help customers with decisions around borrowing, the first of its kind in the Irish market. The new calculator and educational supports, available on Bank of Ireland’s website – Discover your borrowing options | Bank of Ireland| – helps customers understand the products available and choose the right product based on their specific needs.

Customers input the purpose of the borrowing, the amount they want to borrow, and for how long, and the calculator compares the best Bank of Ireland options across loans (Personal Loan, Credit Card, Overdraft, Credit Card Instalment plan).

Susan Russell, CEO, Retail Ireland, Bank of Ireland said: “Making the right decisions and choices has a critical impact on our financial wellbeing over the course of our lives. Those that are more knowledgeable around financial matters are better placed to make sound financial decisions.”

“Trying to choose the right financial product can seem complex, with many credit options available. Our aim is to simplify this. When it comes to borrowing money for large or small reasons, it is important that customers have the confidence to make the right choice for their needs. Sometimes an overdraft might be a better option than a personal loan, or vice versa – it depends on a number of factors. Uniquely in Ireland, our borrowing tool allows customers to quickly compare all the credit options available to them, highlighting the most suitable or cost-effective option.”

Along with the borrowing calculator, customers can access a series of short videos on Bank of Ireland’s website, focused on helping customers understand their borrowing options, including topics like how a Credit Report works and how to minimise their cost of borrowing.

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*Bank of Ireland’s Financial Wellbeing Index (Red C, Sept 24)