'Young people care more about convenience than interest rates'

The importance of good financial habits — and the needed knowledge to acquire those skills —has led a number of U.S. Senators to introduce legislation declaring April as Financial Literacy Month.

U.S. Sens. David Perdue (R-Ga) and Tom Scott (R-S.C.) said the designation is meant to highlight the importance of learning and maintaining healthy financial habits.

With Americans holding the highest credit card balances since 2008 — at a whopping $1 trillion plus — financial experts said the need for education is clear. Savannah credit card holders in 2018 were carrying an average balance per household of $13,134, an increase of $134 over the year before.

To pay off a credit card with a balance of $13,134 in two years at an 18 percent interest rate would take payments of $655 a month.

Paying just a minimum payment of $200 a month on that same balance would take almost 24 years to hit zero.

Nationwide, Americans are averaging $8,788 per household in credit card debt.

“It’s so easy to swipe that plastic,” Barbara Martin, vice president of operations for GeoVista Federal Credit Union, said. “Young people care more about convenience than interest rates.”

Getting in over your head with credit card debt is not the only problem for those who may be financially “illiterate.”

The impact on lives from not knowing the basics of managing one’s own finances can be costly for those lacking money skills, from higher interest rates and bad credit ratings to wasting money on unnecessary fees just to cash a paycheck.

Those with low credit ratings who borrow money, or get a credit card, are going to pay higher interest rates — often in the double-digits, or even triple digits.

Title pawn and payday loans companies lend to those with bad, or no credit, making them easy to get and hard to pay off with interest rates for some at 255 percent.

Martin said cash has been replaced by “plastic” and the young aren’t paying attention.

“The generation of people who balance their checking account to the penny are disappearing,” Martin said. “People now are easily surprised by some charges they agreed to on their accounts.The attention to detail is just not there.”

Education

Education is one tool that schools and businesses are using to help students, employees and customers.

Perdue points to Georgia’s “robust” educational standards for high school students as a bright spot. Georgia requires a personal finance requirement for high school graduation, he said. The requirement can be filled in an economics course and it’s also part of social studies standards.

Perdue said he and his fellow senators are hoping other states will also adopt financial literacy educational standards.

“Both of my parents were school teachers, and I’ve been involved in numerous literacy programs throughout my career,” said Perdue. “Financial literacy programs, like those taught in Georgia’s high schools, help open doors to brighter futures and are proven to result in higher credit scores and lower default rates. By recognizing April as Financial Literacy Month, we are encouraging others to adopt strong standards for financial literacy and raise awareness to the importance of a personal financial education.”

Georgia’s efforts may be paying off with the state’s overall ranking in financial literacy now at No. 29, up from 36 in 2016.

The rankings are done by WalletHub. WalletHub is an online company that offers financial tools. They offer free credit scores and full credit reports that are updated on a daily basis along with comparisons of credit cards, savings, checking, money market accounts and more.

Virginia came in at No. 1 in the WalletHub overall rankings and Louisiana was last.

WalletHub analyzed financial-education programs and consumer habits — combined with the results of WalletHub’s proprietary WalletLiteracy Survey — in each of the 50 states and the District of Columbia.

The average student loan debt per person in Georgia is $28,653.

The Brookings report also notes that young people without savings accounts are less likely to attend college and for those in college, financial stress and credit card debt have been tied to an increased likelihood of missing classes and dropping out.

A report by the Federal Reserve found that a 10 percent increase in student loan debt lowers the likelihood of home ownership after graduation by 1 percent to 2 percent.

Some businesses are taking financial literacy seriously and providing educational tools for their employees.

Employee training

Christy Shapard, vice president of human resources for hotel and management group North Point Hospitality, said a partnership with SunTrust Banks for financial education will be rolled out to their 470 employees on May 1. North Point's holdings include several hotel properties in Savannah’s historic district.

“We are super excited for our employees,” Shapard said.

Shapard said everyone has stress in their lives and for many it’s about money.

“We hope this program will help that and help our employees figure out how to make their paychecks work,” Shapard said.

The program, called Momentum onUp, is user friendly with visually appealing color-coded features, Shapard said.

“It takes you through a budget, but it also shows you how to manage your money based on your values,” Shapard said.

All North Point’s hotel general managers have given the program a test run, and the feedback has been great.

“It’s potentially life-changing,” Shapard said. “Some people have never even written a check.”

GeoVista also works to educate consumers, Martin said, with presentations to different groups and online tools.

“We offer financial literacy classes and alternatives for those who can’t manage a checking account,” Martin said.

GeoVista also has a bank branch at Savannah’s Woodville-Tompkins High School, Martin said.

The bank provides business experience for the students who serve on the bank’s board of directors the bank.

“It’s open two days a week,” Martin said. “Some of the students have even become employees after college.”

Martin said helping customers and students is fulfilling.

“It really feels good to have helped,” Martin said.