Study Examines Hispanics’ Financial Literacy

A newly released research report on Hispanic´s financial literacy has been conducted by Fresno State economics professors Antonio Avalos and Janice Peterson through the Center for Economic Research and Education of Central California.

Their purpose is to gain a better understanding of the financial situations and practices of the Hispanic population in the California Central Valley.

Hispanics comprise close to 50% of the region’s population, making their financial well-being critically important to the success of the region’s economy.

The study intended to provide information that will assist community organizations and the financial services sector in their efforts to better understand the financial education and services needs of this community.

It collected information on the financial situations and practices of Hispanics in the California Central Valley using a telephone-based survey. To enhance reliability, interviewers were fully bilingual in English and Spanish.

Key findings from this study include:

• While 45% of Hispanic respondents indicated that they wished they knew a lot or a bit more about money management, only slightly more than 20% of Non-Hispanic respondents reported feeling that way about their financial knowledge.

• While the majority of both Hispanic (73%) and Non-Hispanic (68%) respondents reported “learning on their own” as the way they learned about personal finance, a relatively small percentage of Hispanic respondents reported learning about personal finance from a financial professional (less than 6%), as opposed to 16% of Non-Hispanic respondents.

• Hispanic respondents expressed less confidence in their financial futures than Non-Hispanics – less than 21% of Hispanics reported feeling very confident that their financial future will be what they want it to be, while more than 33% of Non-Hispanics reported feeling that way.

• A smaller percentage of Hispanic respondents (79.4%) than Non-Hispanic respondents (99.1%) reported ever having had a bank account.

• The percentage of Hispanic respondents that reported ever having a bank account is not as high as that for Non-Hispanics in any county. Kings and Tulare counties have the lowest percentages of Hispanic respondents reporting having ever had bank accounts (65% and 72% respectively), while Fresno and Kern report the highest percentages (85% and 84% respectively).

• Good customer service is important for all groups of bank customers – 41% of Hispanic and 43% of Non-Hispanic respondents identified this is what they liked most about the banks they have worked with. On the other hand, 34% of Hispanic (and 24% of Non-Hispanic) respondents identified high or hidden fees as what they liked the least about the banks they have worked with.

• Both Hispanic (55%) and Non-Hispanic (65%) respondents reported banks as the most usual source for borrowing a large amount of money. More Hispanic (20%) than Non-Hispanic respondents (8.4%), however, identified family as the most usual source for borrowing a large amount of money.

• 31.7% of Hispanic respondents reported having ever been turned down when applying for credit, as opposed to 25.3% among Non-Hispanic respondents. The largest percentages of both Hispanic (41%) and Non-Hispanic (45%) respondents reported “credit problems” (factors that produce a low credit score) as a reason for being denied credit.

• Roughly 12% of Hispanic respondents reported having used the services of a pay lender, compared with 5% of Non-Hispanic respondents. In addition, Hispanic respondents reported using pay day lenders an average of 8.2 times per year, as compared to an average of 3.5 times per year among Non-Hispanic respondents.

• More Hispanic respondents (roughly 76%) than Non-Hispanic respondents (roughly 64%) reported that they currently have a mortgage. Around 90% of both Hispanics and Non-Hispanic respondents reported having mortgages with fixed interest rates, and mortgage interest rates below 8%.

• Banks were the most frequently identified source for borrowing a large amount of money by both groups of respondents – by roughly 55% of Hispanics and 65% of Non-Hispanics. A larger percentage of Hispanics (20%) than Non-Hispanics (8.4%) identified family as their most usual source for borrowing a large amount of money.

• 15% of Hispanic respondents reported they had been late or missed a mortgage payment during the last 12 months, compared with 9.4% of Non-Hispanic respondents. Less than 3% of either group reported having lost a home to foreclosure.

• 32.4% of Hispanic respondents reported that they send money to relatives outside the United States. While a small percentage (2%) reported sending money on a weekly basis, a large percentage of respondents (58%) reported sending money to relatives outside the United States several times a year.

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The Americano

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