A study by the accounting experts at Avenues Financial revealed that Americans are hungering for financial literacy.
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Using the Google Keyword Planner, Avenues Financial analyzed every term in the Department of Financial Protection and Innovation’s “Glossary of Financial Terms” to discover which topics were the most searched for by Americans. The study also broke down those searches by state.
Here are some of the highlighted results from the study, along with an explanation of some of the searched terms by co-founder and CFO of Avenues Financial, Nicole Jensen, CPA.
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Most-Searched Terms
According to the study, here are the most-searched financial terms in the United States:
FAFSA
Credit card
Capital
Stock
Interest rate
Equity
Annual percentage rate
Mortgage
Asset
Annuities
Collateral
Ponzi schemes
Credit
Arbitration
Forbearance
Money market account
Liability
Delinquency
Amortization
Lien
One of the most interesting discoveries in the study was that there were more than 3.38 million monthly searches for the most-searched term: FAFSA. That equates to more than one search every second of every day — financial aid for students is a common need.
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States With the Most Searches per Capita
According to the study, these are the top 10 states when it comes to financial searches on a per-capita basis:
Maryland
Virginia
New York
California
Massachusetts
Texas
Georgia
Nevada
New Jersey
Florida
Of course, as the most-populous states, California and Texas dominate the search rankings in an absolute sense. But Maryland tops the charts on a per-capita basis.
Explanations of Important Financial Terms
Based on the results of the study, Jensen took the time to elaborate on the definitions of some of the more obscure financial terms searched for by Americans. Here’s what the financial expert had to say.
What Is Capital?
“Capital can be most simply described as the money and other items [that] hold value that a person or organization owns,” Jensen explained. “These can include financial assets like cash, stocks and bonds … but ‘capital’ can also include tangible assets, such as equipment or facilities, rather than purely monetary assets.”
Meaning of Annual Percentage Rate?
“Annual percentage rate, or as it is more commonly known, APR, is a percentage [that] represents the real yearly cost of borrowing money, such as taking out a loan or a credit card,” Jensen said. “This amount encompasses the cost of both the borrowing fees and interest on the loan.”
Jensen also highlighted the importance of APR when making financial decisions: “It is crucial that prospective borrowers note the APR offered by different providers and agreements to make an informed decision and determine which may be most suitable for them and which provide the lowest interest and fees on top of the amount owed.”
What Is the Definition of Collateral in Finance?
“In some lending agreements, the borrower must pledge an asset or property to the lender to secure the loan — this asset is known as collateral. This means that if the borrower fails to make the payments due under the lending agreement, the lender can seize the collateral to recover the losses,” Jensen said.
“An example of this would be if a borrower entered a mortgage agreement with a lender to purchase a property, the property would be the collateral for the loan. Then, if the borrower failed to repay the loan as determined by the agreement terms, the lender would have the right to take possession of the property to recover the amount owed.”
What Is a Ponzi Scheme?
“People should beware of Ponzi schemes, as they are a type of fraudulent investment scam,” Jensen explained. “Essentially, this is where early investors in the scheme are paid returns from capital gained from new investors rather than from profits from the business activities or investments.”
Jensen added, “These schemes usually collapse when they can no longer recruit new investors or when existing investors seek to withdraw funds, and these demands cannot be met.”
What Is Forbearance?
“Forbearance is when a lender allows a borrower to temporarily pause or reduce their loan payments. This is typically granted when the borrower has a temporary financial setback, easing their financial burden and deterring the risk that the borrower will default on their loan,” Jensen said.
For example, Jensen said forbearance might be granted due to a divorce or medical issues.
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Sources
Nicole Jensen, Avenues Financial
This article originally appeared on GOBankingRates.com: 20 Most Searched Financial Terms in the US
