Banking jargon is confusing savers and many fail to understand common phrases, according to new research by Aldermore.
Aldermore asked savers across the UK to correctly identify the meaning of everyday savings acronyms.
Almost six in ten (59 per cent) of all respondents failed to identify AER as Annual Equivalent Rate, while only half (54 per cent) correctly identified the ISA as an Individual Savings Account.
Savers were also asked to identify the correct amount of gross interest earnt from placing £100 into a two-year fixed rate savings account paying 3 per cent per annum. Just under a third (32 per cent) worked out they would earn £6.09. Almost three-in-ten suggested it was £6.
The research highlighted the effect this lack of understanding has on people’s ability to save. While just under a third (32 per cent) said they fully understood how savings accounts work and what they’re likely to earn, 31 per cent said they put money away because they think it’s important, but don’t fully understand the terminology.
When it comes to finding out more information, two-thirds say finance websites are the most likely source they would turn to if they wanted to understand savings accounts.
Almost two-fifths (37 per cent) would go to their local bank or building society branch and just under a third (31 per cent) said they would speak to friends or family.
Almost four in ten (38 per cent) of savers said that in the event of being unable to find sufficient information, they would move their savings elsewhere. Only four per cent said it would stop them from saving altogether.
Simon Healy, Aldermore’s group managing director for savings, said: “Savings products should be easy to understand and easy to open. This research shows that many savers don’t fully understand all the language around their accounts and could ultimately be missing out on better returns.
“It is pleasing to see many are turning to online personal finance websites who not only provide a great resource, but highlight the best deals in the savings market too.
“As part of our aim to help customers realise their ambitions, we have put together a ‘Savings Glossary’ to help them understand what things mean and to help ensure they get the most from their money.”