Education, Fuel Prices, Banking
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Most high school and college students work, and manage savings and checking accounts, but that doesn't mean they have much financial savvy. The average participant in a financial literacy test sponsored by the Jump$tart Coalition, a financial educational resource organization in Washington, DC, answered only 52 percent of the questions right, which would be an F on a school exam. The average score in a 1997 survey was 57 percent.
Only 38 percent of the teenagers knew that their federal income tax would at least double if their annual income grew from $15,000 to $30,000. Fewer than half knew that retirement income paid by a company is called a pension. Thirty percent thought this income was called Social Security.
Financial experience didn't appear to increase students' knowledge. Those who own stocks in their own name scored the same as students who don't. Those who receive an allowance scored slightly worse than those with no regular stipend.
Despite their financial confusion, most students have money of their own. Nearly two-thirds of those aged 16 to 22 work at least 20 hours a week and in the summer, 80 percent have a savings account, and more than half have a checking account, according to a survey by the American Savings Education Council. Most are saving for their education and a car. Virtually all the students said they rely on their parents for financial information.
Before you gripe about the high cost of filling your car's gas tank, consider that typical American gasoline prices$1.52 per gallon of self-serve unleadedare about average among the world's metropolitan centers. If you're renting a car in Europe or Asia, a trip to the filling station will be far harder on your wallet. Runzheimer International, a Rochester, WI, management consulting firm, surveyed fuel prices at 75 locations worldwide.
Budget for steep prices in Hong Kong ($5.38 per gallon), London ($5.05), Oslo ($4.54), Seoul ($4.52), and Paris ($4.28). In many of the world's oil-producing regions, however, gasoline is cheaper than bottled water: Caracas (40 cents per gallon), Jakarta (45 cents), Kuwait City (76 cents), Manama, Bahrain (82 cents), and Abu Dhabi, United Arab Emirates (92 cents).
Banks have finally acknowledged the obvious: Many interest-bearing checking account customers pay more to maintain their accounts than they collect in interest. That's the conclusion of Bankrate.com's survey of more than 1,200 checking accounts at 353 institutions nationwide. A customer with an average account balance of $2,000, for example, typically pays $125 a year in fees while earning only $23 in interest. Average nationwide monthly feesfor those who don't maintain a minimum balancefor interest checking accounts are $10.43, up 9 percent in the past two years. The average yield for checking accounts is a measly 1.17 percent.
The North Palm Beach, FL, financial Web site found that even though the Federal Reserve Board has hiked interest rates, bank checking account yields haven't budged. Chalk it up to cost shifting. Banks have to offer competitive rates to attract and retain CD customers, so they make up the shortfall by raising checking account fees and keeping a lid on interest.
Other bank fees have inched up, too. The bounced-check fee has sprung to an average of $23.87. And surcharges for using other banks' ATMs have increased to an average of $1.43 per transaction, up 10 cents from two years ago. You won't have to pay a fee, though, if your bank allows consumers to use ATM cards to overpay for supermarket purchases and receive the balance in cash. Increasing numbers of banks offer this option.
Yvonne Wollenberg. Financial Beat. Medical Economics 2000;22:16.