Poll shows teens lack credit card knowledge

When it comes to personal finance, are U.S. high schoolers getting dumber? That appears to be the case based on the results of the latest Jump$tart Coalition student survey: High school seniors correctly answered fewer than half of the survey questions, representing a drop in the percentage of right answers from the 2006 poll. 

The biennial survey from Jump$tart, a national coalition of organizations dedicated to improving the financial literacy of young people, "demonstrates what seniors in high school know about personal finance basics," according to a Federal Reserve press release. "The financial preparedness of our nation's youth is essential to their well-being and of vital importance to our economic future," Fed Chairman Ben Bernanke said in a speech during a joint press conference earlier today. "Choosing a credit card, saving for retirement or for a child's education, or buying a home now requires more financial savvy than ever before," Bernanke said. "Financial literacy and consumer education -- coupled with robust consumer protection -- makes the financial marketplace effective and efficient, and better equips consumers to make tough yet smart financial decisions."

The financial marketplace could be in trouble: High schoolers picked the correct answers to survey questions just an average 47.5 percent percent of the time, down from a score of 52.4 percent answers correctly chosen by the senior class of 2006.

Apparently, high schoolers also need more education on credit cards specifically. Fewer than half (45.9 percent) knew that credit card issuers would most likely provide a limited credit line to an 18-year-old graduate "with few valuable possessions and no credit history" in order to reduce risk to the bank. Only 13 percent of respondents were aware that under federal law the maximum liability on a stolen credit card (provided the issuer is notified as soon as possible) totals $50, with most students (52.8 percent) figuring they would owe nothing. Meanwhile, just 48 percent of students correctly identified the fact that a credit card user who makes only minimum monthly payments will pay more in finance charges than a cardholder who pays the balance in full.

Perhaps some of the confusion over credit cards stems from a lack of firsthand experience. Half of the students polled said they don't use credit cards. But a decent chunk of high school seniors do have practice with plastic -- 44.2 percent said they use their own credit cards, 45.9 percent said they use a parent's card and 45.2 percent said they use both their own credit cards and their parents' plastic.  

If there is a silver lining to the survey, it's that higher education means an improved grasp of personal finance basics. Students questioned in the first-ever Jump$tart poll of college students produced "higher scores than their high school peers with 62 percent of the questions correctly answered," according to a coalition press release announcing the results. "Scores among college students increased with their rank in school. College freshman, for example, recorded a 59 percent score, while college seniors correctly answered 65 percent of the questions," the release said.