A majority of Americans can't calculate interest rates or answer simple questions about things like financial risk and bonds, according to a new study.
The FINRA Foundation's National Capability Study, released on July 12, surveyed 27,564 Americans over a five-month period in 2015. About two thirds of the Americans surveyed failed the simple, five-question financial literacy test, TIME reported.
Only 28 percent of respondents know that bond prices rise when interest rates fall, while others could not calculate how much interest they'd owe per year on a $1,000 loan with a 20 percent interest rate.
Along with the test, the FINRA Foundation -- which is dedicated to helping Americans understand personal finance and avoid costly mistakes -- asked survey participants a range of questions about their financial health and their spending habits.
On the positive side, many people said they'd recovered from the financial crisis of 2009, when 64 percent reported difficulty covering their monthly expenses. In 2015, 52 percent told FINRA they had month-to-month financial troubles. Americans are also reportedly more careful with credit card debt, with more than half telling the survey that they pay their credit card balance each month, TIME reported.
On the negative side, financial limitations lead many people -- especially women -- to skip doctor visits, leave prescriptions unfilled, and put off costly medical procedures, according to the study. Additionally, 39 percent of blacks and 34 percent of Latinos used pawn shops and payday loans, which carry much higher interest rates and risk for the borrowers.
"This research underscores the critical need for innovative strategies to equip consumers with the tools and education required to effectively manage their financial lives,” FINRA Foundation Chairman Richard Ketchum wrote in a press release, according to TIME. “My hope is that policymakers, researchers, and advocates will use these findings to make more informed decisions about how to best reach underserved populations.”
And while Americans have been smarter about paying off debt -- and avoiding debt in the first place -- another worrying indicator is that most don't have cash reserves.
“One thing that hasn’t changed from year to year is most Americans are not saving,” Gerri Walsh, president of the FINRA foundation, told The Wall Street Journal.