While 78 per cent of Canadians believe they are financially literate, nearly 6 in 10 failed to answer questions on financial literacy accurately, according to a new Ipsos poll commissioned by LowestRates.ca.
The majority of Canadians surveyed failed the test, yet of those who passed, most only received a grade of D or C. Respondents had to answer 15 true or false questions on terminology concerning mortgages, auto insurance and tax-free savings accounts (TFSAs).
Questions which had the highest failure rates include :
- FALSE: A mortgage term refers to the length of time you need to pay off your mortgage. (70 per cent provided the wrong answer)
- TRUE: You must pay for government insurance on mortgages when you have a down payment of less than 20 per cent, unless the home is worth $1 million or more. (67 per cent provided the wrong answer)
- FALSE: A car that is more expensive always costs more to insure than a cheaper car. (67 per cent provided the wrong answer).
"Financial literacy continues to be a hot topic and we know it needs to improve, but Canadians need to be honest with themselves about what they don't understand," says Justin Thouin, CEO, LowestRates.ca. "For example, the area we found Canadians were the weakest in was mortgages. Considering that buying a home is probably the largest investment of your life, this is a serious problem."
"Our financial literacy test is more than just understanding how to balance a cheque book and the questions are based on common questions asked by our site users," explains Thouin. "There are misconceptions out there, so we want to provide correct information about every day financial decisions like mortgage and car insurance to help people make the right choices."