Financial Literacy Frequently Asked Questions
What Should a Quality Financial Literacy Program Accomplish?
A quality financial literacy program should help people practice good financial behaviors, which results in positive changes in their financial lives. The changes would include increases in their assets, net worth and financial wellbeing and at the same time; result in decreases in their personal and financial distresses. A quality financial literacy program would provide access to information that would help individuals in all phases of their work careers and in their personal lives.
Why Don’t Employees Save, or Save Enough, for Retirement?
The lack of financial knowledge, financial plans, proper credit management, and proper spending and savings plans are the major why employees do not save for their retirement. Research shows that one out of every four employees is seriously distressed or financially dissatisfied. Employees who find themselves in these situations do not make the best decisions for themselves now, nor for their future well being.
How Can Employee Benefits Help?
The employer’s benefits package is the heart of the financial success of an employee. Employees who make wise benefit choices save money, reduce their tax obligations and are better aligned for the future, including making savings for their retirements. Good benefit decisions lead to better financial behaviors that could spell success.
What Can People Do to Get Ahead Financially?
The only way that anyone can get ahead is if they make some type of sacrifice. A person can get ahead financially by sacrificing or reducing their current levels of spending and then saving the results.
What are Good Financial Behaviors?
Good financial behaviors are any means or methods that result in financial success. As mentioned in the previous question, one has to make some type of sacrifice in order to get ahead financially. That being the case, one must sacrifice and spend less than they earn. Most financial experts agree that in order to have good financial behaviors, one needs to establish some type of financial goals or at least a realistic plan to achieve those goals. At least once a year, one should review all of their insurances, including life, health, disability, long-term care, and casualty. One needs to review all their debts, from credit cards and mortgages to auto loans, boat loans or any other long-term obligations they may have, thereby keeping track of their interest rates and the terms of their your loans and credit cards. One must get and keep their legal affairs in order. One suggestion is to have a will and to keep it up to date. Finally, one needs to monitor their savings and investments.
How Can Employers Help Employees Improve Their Personal Financial Behaviors?
Employers need to do all that they can to educate their employees financially. Employees need to realize that they have financial behaviors that need changing. In order to succeed, employees need to change those detrimental financial behaviors. By giving employees the financial knowledge necessary and providing a quality financial literacy program, employers can help their employees to achieve financial success.
Credit Frequently Asked Questions
1. What is credit?
You could consider credit as a tool you can use to build your credit history. You could also use it as a way to stretch your finances each month. Credit is your reputation when it comes to money and responsibility. It’s what lenders and employers look at to make sure you’re reliable when you want to rent an apartment, buy a house, get a job, or buy a car.
2. How do I maintain “good” credit?
First, stay within the set credit limit on your card and keep track of how much credit you have left (i.e., your available credit). Second, always pay at least the minimum amount due on time. Paying late will result in late payment fees and negative reporting to credit bureaus.
3. How can I avoid past due fees?
As soon as you get your statement, check the due date and minimum payment due. Make sure you pay at least the minimum payment each month and mail your payment seven to ten days before it’s due, to allow for mail time. You can also pay your bill through our free Online Bill Payment. Log in to or enroll in Online Banking.
4. How can I keep my credit under control?
Remember that your credit card is a tool that allows you to buy what you want, when you want it. But it’s not free money and every dollar you charge will eventually have to be paid back. Also, budget your spending so you’re only charging what you can pay off at the end of each month.
5. What are the consequences of having bad credit?
Your financial reputation could be damaged for 7 to 10 years. Mismanaging your credit signals a lack of financial responsibility to any company that might lend you money or hire you for a job. What’s more, it’s tough to repair bad credit and it takes years of work and financial control.
6. How do I deal with creditors?
Be honest. If you think you’re going to miss a payment, take the initiative and call the creditor immediately. It’s important to remember that if anything happens, it reflects negatively on you, not your creditors.
7. How can I get a copy of my credit report?
You are entitled to a free copy of your credit report once every year. For a combined report from all three major bureaus, go to www.annualcreditreport.com. If you need your report more frequently than once per year, or if you need a report from only one of the bureaus, you may need to pay a fee. Another time when you are allowed to request a free credit bureau report is if you think you may be a victim of some kind of fraud, like identity theft. In this case, you should immediately contact the credit bureaus and ask them to issue a fraud alert on your account. It will take effect within 24 hours and is the first step in fighting fraud. This alert is good for 90 days, and no new credit accounts can be opened before a call is made to you. A fresh copy of your credit report will show you if any new accounts are opened.
8. How can I increase my credit line?
If you keep your Capital One account in good standing, we’ll review it periodically for possible increases.
9. What’s the difference between variable-rate and fixed-rate cards?
Variable-rate cards have APRs based on financial indexes such as the Prime Rate or London Interbank Offered Rate (LIBOR). When the index decreases, so does the interest rate on your card. Your annual percentage rate (APR) is a combination of the index and a previously disclosed number of percentage points. A fixed APR doesn’t vary based on index rate fluctuations.
10. Where do credit bureaus get their information?
The personal information appearing on your credit report may either be reported by a credit grantor, obtained from public records, or it could be updated in response to correspondence with the individual consumer.
11. Do the bureaus make credit decisions?
Lenders make credit decisions, not credit bureaus. Each lender has its own formula for evaluating a credit application and only the lender can tell you why it made a decision. The role of the credit bureau is to supply the lender with the contents of the report for review when making credit decisions. Many times, the decision does not rely on your bureau records alone, but instead is based on factors like your income, length of residence, or employment.
12. Can I get a copy of my report over the phone?
Because of the confidential nature of credit information, credit bureaus cannot disclose the contents of the report over the phone. You can, however, write to the credit bureaus or order and view your credit report online by visiting www.experian.com, www.equifax.com or www.transunion.com.
13. Who else can access my credit report?
A consumer reporting agency may furnish a consumer report under the following permissible purpose circumstances as defined in Section 604 of the Fair Credit Reporting Act (FCRA):
In response to a court order or a Federal Grand Jury Subpoena.
In accordance with the written instruction of the consumer.
To a person whom someone has reason to believe
Intends to use the report in connection with the extension of credit, or the review or collection of an account
Intends to use the report for insurance underwriting
Intends to use the report for determining the eligibility for a government license or benefit where the government agency is required to consider the consumer’s financial status
Otherwise has a legitimate business need for the report in connection with a business transaction involving the consumer
The Goal of Quality Workplace Financial Programs
A workplace financial program that accomplishes the goal to increase employee financial well-being will over time result in more and more employees reporting higher financial well-being. Every year perhaps 10%, 20% or even 30% of employees should be able to self-report higher scores on their perceptions about their personal finances.
A workplace financial program that accomplishes the goal to increase employee financial well-being will over time result in more and more employees reporting higher financial well-being. Every year perhaps 10%, 20% or even 30% of employees should be able to self-report higher scores on their perceptions about their personal finances. These employees are those who are more satisfied with their financial well-being and less stressed about financial matters. These are good workers, too.
If the measured financial health of employees is not rising over time, the employer should consider firing the primary financial program provider. Alternatively, perhaps the employer could give the provider one year to make improvements in their communications and financial program. The provider can make needed changes, they should, and if they can’t they quickly will learn how. After all the financial provider work for the employer and they should deliver what is asked.
A quality financial program should have multiple components to truly reach all the employees and provide the best resources to help employees improve their financial lives. Teach to the test: Aim to reduce employees’ financial distress and improve their financial well-being. How? Communicate these key messages.
The Key Messages of Quality Workplace Financial Programs
1. Emergency Savings. Without $500, $1,000 or $2,000 in emergency savings, depending upon the income of the employee, simply living life and its frequent financial challenges, will continue to regularly wreck that person’s finances…every year…forever. Having an emergency savings fund reduces financial distress.
2. Pay Down Bills. Employees who usually make the minimum payment or just a little more will never get out of credit card debt. One who owes $8,000 on credit cards at 18% interest and makes a 3% monthly payment will pay on that debt for 11 years—assuming they never put another charge on the card. Making progress reducing credit card balances reduces financial distress and increases financial well-being.
3. Spending Plan. Most employees do not make a budget or follow one. They have no spending plan. Employees who have some kind of written spending plan—no matter how elementary—are those who have more confidence about their personal finances. Having a spending plan reduces financial distress and increases financial well-being.
4. Benefits Selections. Six in10 employees make their selections among their employer-provided benefits in less than one hour; many take less time. Wisely made benefit choices help employees balance their budgets as well as find money to contribute to their retirement plan, frequently with no change in one’s net pay. The result is more saving and better financial well-being.
The Result of Providing Employees Quality Financial Programs
When effectively communicated these key messages cause employees to live their everyday financial lives with more satisfaction as well as prepare well for a financially successful retirement.
Quality Requires a Team of Financial Providers
It is impossible for one primary financial provider no matter how excellent to offer employees easy access to all of the financial resources to genuinely help them change their financial lives for the better. It is widely understood that 401(k) education providers are not as successful as they should be since the great majority of employees are not saving enough for retirement. Many employees are living paycheck-to-paycheck and it is not just those with moderate or low incomes.
Employers should offer employees the multiple services and products of a team of quality financial program providers who coordinate their services. Communications to employees on the key messages should regularly emphasize the availability of provider services such as credit counseling, credit union, benefits selection education, income tax preparation, speedily paying off a home mortgage, 401(k) education, and financial advice.