Consumer Finance: Factors Affecting the Financial Literacy of Individuals with Limited English Proficiency
Published: 2010-05-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: According to Census data, more than 12 million adults in the United States report they do not speak English well or at all. Proficiency in reading, writing, speaking, and understanding the English language appears to be linked to multiple dimensions of adult life in the United States, including financial literacy--the ability to make informed judgments and take effective actions regarding the current and future use and management of money. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 mandated GAO to examine the relationship between fluency in the English language and financial literacy. Responding to this mandate, this report examines the extent, if any, to which individuals with limited English proficiency are impeded in their financial literacy and conduct of financial affairs. To address this objective, GAO conducted a literature review of relevant studies, reports, and surveys, and conducted interviews at federal, nonprofit, and private entities that address financial literacy issues and serve people with limited English proficiency. GAO also conducted a series of focus groups with consumers and with staff at community and financial organizations. GAO makes no recommendations in this report.
section_title: What GAO Found
paragraphs: Staff at governmental, nongovernmental, and private organizations that work with non-English speaking populations consistently told us that, in their experience, a lack of proficiency in English can create significant barriers to financial literacy and to conducting everyday financial affairs. For example, service providers and consumers with limited English proficiency told us that because most financial documents are available only in English, individuals with limited English proficiency can face challenges completing account applications, understanding contracts, and resolving problems, such as erroneous bills. In addition, financial education materials--such as print material, Web sites, broadcast media, and classroom curricula--are not always available in languages other than English and, in some cases, Spanish. Further, information and documents related to financial products tend to be very complex and can use language confusing even to native English speakers. In some cases, written financial materials are provided in other languages, but the translation may not be clear if it is not written using colloquial or culturally appropriate language. Interpretation (oral translation) can also be of limited usefulness if the interpreter does not fully understand or is not able to explain the material, a problem exacerbated by the fact that adults with limited English proficiency often receive assistance from their minor children. Many factors other than language also influence the financial literacy of individuals with limited English proficiency. For example, immigrants may lack familiarity with the U.S. financial system and its products, which can differ greatly from those in their native countries. Cultural differences can also play a role in financial literacy because different populations have dissimilar norms, attitudes, and experiences related to managing money. For instance, in some cultures carrying debt is viewed negatively, which may deter immigrants from such cultures from taking loans to purchase homes or cars and building credit histories. In addition, some studies have reported a correlation between financial literacy and levels of income and education. As a result of these issues, some service providers and advocates suggested that efforts to improve the financial literacy of people with limited English proficiency go beyond translation and also address underlying cultural and socioeconomic factors. Evidence suggests that people with limited English proficiency are less likely than the U.S. population as a whole to have accounts at banks and other mainstream financial institutions. They are also more likely to use alternative financial services--such as payday lenders and check-cashing services--that often have unfavorable fees, terms, and conditions. Further, the Federal Trade Commission and immigrant advocacy organizations have noted that some populations with limited English language skills may be more susceptible to fraudulent and predatory practices. Several service providers we spoke with said that financial education can play an important role in helping consumers with limited English proficiency avoid abusive and predatory practices.

section_title: Letter
paragraphs: The United States has a highly diverse population representing cultures  from all over the world. English is not the primary language of many  people living in the United States, and significant numbers have limited  English proficiency—that is, a limited ability to read, write, speak, or  understand the English language. For example, according to 2008 Census  statistics, more than 12 million adults reported that they do not speak  English well or do not speak English at all. English language ability  appears to be linked to multiple dimensions of adult life in the United  States, including civic participation and workforce participation and  mobility. The ability to speak English can also affect financial literacy— the ability to make informed judgments and take effective actions  regarding the current and future use and management of money.
The Credit Card Accountability, Responsibility and Disclosure Act of 2009  mandated GAO to examine the relationship between fluency in the English  language and financial literacy. This report responds to that mandate by  examining the extent, if any, to which individuals with limited English  proficiency are impeded in their financial literacy and conduct of financial  affairs. To address this objective, we conducted a literature review of  relevant studies, reports, and surveys. We also conducted interviews at and  gathered related studies and educational materials from federal agencies,  including the Federal Trade Commission and Department of the Treasury,  organizations that serve or advocate for populations with limited English  proficiency, organizations that provide or support financial literacy and  education, and financial services institutions. We also held a series of 10  focus groups, each of which included 5 to 11 participants and addressed the  barriers that individuals with limited English proficiency may face in  improving financial literacy and conducting their financial affairs. These  included two focus groups with individual consumers with limited English  proficiency who speak Spanish and Vietnamese, respectively, and eight  focus groups with service providers that included staff from community- based organizations, credit unions, credit counseling and financial  education agencies, large banks, and community banks, all of which serve  consumers with limited English proficiency. While the information we  collected from our focus groups and from the organizations we contacted  provided context on the issues discussed, it is not generalizable to the entire  populations these groups represented. Further, our work may not have  addressed all of the different perspectives of the many diverse cultures  comprised by people with limited English proficiency in the United States.
We conducted our work from August 2009 to May 2010 in accordance with  all sections of GAO’s Quality Assurance Framework that are relevant to  our objective. The framework requires that we plan and perform the  engagement to obtain sufficient and appropriate evidence to meet our  stated objective and to discuss any limitations in our work. We believe that  the information and data obtained, and the analysis conducted, provide a  reasonable basis for any findings and conclusions in this product.
subsections: section_title: Background
paragraphs: Financial literacy can be described as the ability to use knowledge and  skills to manage money effectively. It includes the ability to understand  financial choices, plan for the future, spend wisely, and manage the  challenges that come with life events such as a job loss and saving for  retirement or a child’s education. It can also encompass financial  education—the process by which people improve their understanding of  financial products, services, and concepts. Financial literacy has received  increased attention in recent years because poor financial management  and decision making can result in a lower standard of living and prevent  families from reaching important long-term goals, such as buying a home.  Financial literacy has broader public policy implications as well. For  example, the recent financial crisis can be attributed, at least in part, to  unwise decisions by consumers about the use of credit. Moreover,  educating the public about the importance of saving may be critical to  boosting our national saving rate, an important element to improving  America’s economic growth.
The population of adults with limited English proficiency in the United  States is diverse with respect to immigration status, country of origin,  educational background, literacy in native language, age, and family status.  Generally, adults with limited English proficiency have immigrated to the  United States and include legal permanent residents, naturalized citizens,  refugees, and undocumented individuals, but some of these adults are native  born. According to the Census Bureau’s 2006-2008 American Community  Survey, about 12.4 million adults in the United States—or 5.5 percent of the  total U.S. adult population—reported speaking English not well or not at  all. As shown in table 1, our analysis of the Census data shows that Spanish  was the native language of about 74 percent of those adults who did not  speak English well or at all, with Chinese, Vietnamese, Korean, and Russian  representing the next most common native languages.
The number of American residents who reported speaking English not  well or not at all grew by about 29 percent from the 2000 Census to the  2006-2008 American Community Survey data, as compared to those who  reported speaking English very well or well, which grew by about 8  percent during the same timeframe. As shown in figure 1, populations with  limited English proficiency tend to be more concentrated in certain parts  of the country. More than 13 percent of California’s population was limited  English proficient in 2008, as were more than 8 percent of the populations  of Texas, Arizona, and New York.
Persons in the United States with limited English proficiency appear to  have lower incomes, on average, than fluent English speakers. While  limited data exist specifically on the relationship between limited English  proficiency and economic status, an analysis of 2007 American Community  Survey data by the Migration Policy Institute found that 20 percent of  those who spoke Spanish at home lived in poverty, as did 11.8 percent of  those who spoke Asian or Pacific Island languages, and 21.1 percent of  those who spoke other languages—as compared with a poverty rate of  11.2 percent among persons who spoke only English. A study by the  Federal Reserve Bank of Chicago and the Brookings Institution, using 2004  data from the Congressional Budget Office, reported that the median  income of a family headed by an immigrant (irrespective of English  language proficiency) was $42,980—and $34,798 for a family headed by an  immigrant from Latin America—compared with $54,686 for families  headed by someone born in the United States. There are also indications  that English proficiency correlates with educational attainment. For  example, the Migration Policy Institute analysis found that 41 percent of  adults in Spanish-speaking households in the United States did not finish  high school, as compared with 12 percent of adults in English-only  speaking households.
Little prior research has been conducted specifically on the relationship  between financial literacy and lack of proficiency in English. A 2005  research review by Lutheran Immigration and Refugee Service revealed  almost no studies that examined how the immigrant experience influences  financial literacy. Similarly, a literature search that we conducted found a  significant amount of research on financial literacy in general and with  regard to certain populations, but almost nothing that examined the role  that language itself plays in financial literacy and financial education.
Further, experts on financial literacy that we consulted in the nonprofit  and federal sectors told us they were aware of little or no existing work  specifically on the barriers to financial literacy faced by those with limited  English proficiency.
Some data do exist on financial literacy among Hispanic populations;  however, the data do not generally distinguish between Hispanics who are  and are not proficient in English. (About 70 percent of Hispanics in the  United States self-report that they only speak English or they speak it well  or very well, according to 2006-2008 American Community Survey data.)  Among the studies that did not directly address English language ability, a  2009 survey by the Financial Industry Regulatory Authority found that  Hispanic respondents were less likely than Asian Americans and non- Hispanic Caucasians to answer basic financial literacy questions  correctly. Further, a 2003 survey on retirement issues by the Employee  Benefit Research Institute found that 43 percent of Hispanic workers  described their personal knowledge as “knowing nothing” about investing  or saving for retirement, as compared to 12 percent for all workers in the  United States. The institute also found that those with the least amount of  knowledge were much more likely to have poor English language skills.
section_title: Language Barriers Can Impede Everyday Financial Transactions
paragraphs: Despite a lack of systematic research, a variety of stakeholders agree that  a lack of proficiency in English can create significant barriers to financial  literacy and to conducting everyday financial affairs, particularly given the  complexity of financial products and the language often used to describe  them.
subsections: section_title: Limited English Proficiency Can Create Challenges to Conducting Financial Affairs
paragraphs: Staff we spoke with at financial institutions, federal agencies, and  community and advocacy organizations that work with non-English  speaking populations consistently told us that, in their experience, a lack  of proficiency in English can be a significant barrier to financial literacy.  Some explained that because language is the medium most used to access  information and ideas, individuals lacking English language skills are  limited in their ability to communicate with English-speaking financial  service providers and to perform certain tasks necessary to initiate  financial transactions and access financial tools and educational materials.  For example:    Completing key documents. Service providers and consumers with limited  English proficiency told us that most financial documents are available  only in English, which limits the ability of individuals with limited English  proficiency to complete applications, understand and sign contracts, and  conduct other everyday financial affairs without assistance. Several  representatives from financial institutions told us that they are reluctant to  provide translations of documents, such as disclosures and contracts,  because of liability concerns.
Managing bank accounts. Several bankers and others with whom we  spoke noted that individuals who can not write in English find it difficult  to write checks, which requires spelling out a dollar amount. For this  reason, they said, debit card use has become popular among some  individuals with limited English proficiency. The financial literacy study by  Lutheran Immigration and Refugee Service noted that some refugees with  limited literacy skills have difficulty using banks because they are not able  to track deposits and withdrawals from their accounts.
Resolving problems. Some consumers and service providers we spoke  with said that limited English proficiency serves as a particular barrier  when it comes to asking questions, such as inquiring about additional fees  on credit card statements, or resolving problems, such as correcting  erroneous billing statements. One consumer with limited English  proficiency told us that although he speaks some English, he has difficulty  understanding and negotiating automated telephone menu systems that  one must often use to get assistance.
Accessing financial education. Although there is a multitude of print  material, Web sites, broadcast media, and classroom curricula provided by  government, nonprofit, and private sources aimed at improving financial  education, these resources are not always available in languages other  than English. Financial education initiatives that are provided in languages  other than English or that are aimed at particular immigrant populations  do exist (see appendix II), but are more limited, especially for speakers of  languages other than Spanish.
section_title: Financial Products Often Use Language That Is Particularly Complex
paragraphs: Information and documents related to financial products tend to be very  complex and can be hard to understand, even for native English speakers.  The Financial Literacy and Education Commission, which is comprised of  20 federal agencies, has noted that personal financial management is an  extremely complex matter that requires significant resources and  commitment for consumers to understand and evaluate the multitude of  financial products available in the marketplace. Moreover, the language  used in financial documents can be extremely confusing. For instance, in  2006 we reported that credit card disclosures were often written well  above the eighth-grade level at which about half of U.S. adults read. In a  separate report, we similarly found that the disclosures made by various  lenders to inform consumers of the risks of alternative mortgage products,  such as interest-only loans, used language too complex for many adults to  understand. A study by the Federal Trade Commission in 2007 on  consumer mortgage disclosures reported that home loan borrowers were  frequently confused by the disclosures about their mortgages and  experienced significant misunderstandings about the terms of their loans.
Having limited proficiency in English clearly exacerbates these challenges.  In 2008, the National Council of La Raza sponsored four focus groups on  credit issues and found that, for some Hispanics, language barriers  compounded the difficulties that all participants faced in understanding  the jargon and fine print of applications, contracts, and credit reports.  The report by Lutheran Immigration and Refugee Service stated that  advanced literacy skills are needed to understand the terms and  conditions tied to most financial contracts and that it can take up to 5  years of regular English communication and practice for an immigrant  who is not a native English speaker to achieve that level of advanced  literacy. These findings were corroborated through focus groups we  conducted with a wide range of individuals who provide financial and  social services to populations who lack English proficiency. These  providers frequently noted that the complexity and specialized language of  financial services can make conducting financial affairs particularly  challenging for individuals with limited English proficiency.
section_title: Translation of Financial Information May Not Always Be Effective
paragraphs: In some cases, written financial materials are provided in languages other  than English, but the translation may not be fully comprehensible if it is  not written using colloquial or culturally appropriate language. A 2004  report by the National Council of La Raza noted that financial education  materials are often translated from English to their literal equivalent in  Spanish, which may be unintelligible or difficult for the reader to  understand. The report recommended the use of translation that  attempts to convey images or messages without regard to literal phrasing  and that would account for cultural differences and capture and cla meaning of terms. Financial service providers we spoke with also noted  that many specific terms used in the U.S. financial system—such as  “subprime” and “401K”—do not always have equivalent terms in other  languages, which can make translation particularly difficult. Some  financial education materials for those with limited English proficiency  provide English and translated versions side-by-side to help readers  improve their financial vocabulary and recognize key terms.
Interpretation—that is, oral translation—can also be problematic. The  service providers we spoke with said that individuals with limited English  proficiency frequently rely on friends and family members to serve as  interpreters when dealing with financial affairs. However, interpreters may  not be reliable because they may not fully understand or be able to explain  the material. In particular, advocates for immigrant communities told us  that adults often use as interpreters their minor children, who may not  have the ability to accurately convey complex information. The Lutheran  Immigration and Refugee Service report noted that many immigrants rely  on relatives already residing in the United States to introduce them to the  American financial system even though their family members may not  have complete or accurate information themselves. In focus groups  conducted for a report by Freddie Mac on Asian homebuyers, Chinese,  Korean, and Vietnamese immigrants said that one of the key reasons they  would rather use Asian real estate agents is because they preferred to  conduct business in their native language, even when they were proficient  in English.
Some financial institutions have staff that can interpret or provide  information in languages other than English, but it is unclear how widely  this occurs. A report by the public interest group Appleseed on expanding  and improving services for immigrants noted that the absence of culturally  competent bilingual staff and services is a barrier to providing financial  services to the low- and moderate-income immigrant market. In the same  way, the financial education report by the National Council of La Raza  stated that U.S. banks do not always employ bicultural, bilingual staff who  can meet the diverse needs of Hispanics, especially immigrants. One  provider told us that providing bilingual customer service can be  challenging because even bilingual employees may not be able to  accurately explain all the financial products offered by the institution. The  representative of one financial services firm told us it forbids its staff from  translating information or serving as interpreters for fear of providing  incorrect or incomplete information. Similarly, an article in the trade  journal Employee Benefit News cautioned that asking bilingual employees  to present benefits information can be risky because the employee may  lack financial expertise and the knowledge to explain industry-specific  terms.
section_title: Many Factors Other Than Language Influence the Financial Literacy of Individuals with Limited English Proficiency
paragraphs: Federal agency officials as well as financial literacy experts and staff from  service providers such as nonprofit organizations, credit unions, and  banks that work with immigrant communities informed us that factors  other than language often serve as barriers to financial literacy for people  with limited English proficiency. These factors can include a lack of  familiarity with the U.S. financial system, cultural differences, general  mistrust of financial institutions, and income and education levels.
Lack of familiarity with the U.S. financial system. Some immigrants to  the United States—some of whom are not proficient in English—lack  familiarity with the U.S. financial system and its products, which may  differ greatly from those in their native countries. These individuals may  not have had exposure to mainstream financial institutions, such as banks,  or may not have had experience with credit cards or retirement programs.  A 2006 study sponsored by the Inter-American Development Bank noted  that many new Hispanic immigrants have never had a bank account and  that this is one of the obstacles that stand in the way of greater financial  integration of recent Hispanic immigrants. Similarly, in focus groups  conducted by Freddie Mac for its report on Asian homebuyers, new Asian  immigrants cited unfamiliarity with the U.S. financial system as one  challenge that they faced. Officials at the Internal Revenue Service told  us that individuals with limited English proficiency often face addition al  challenges understanding the U.S. tax system, in part because the tax  system in their home country was very different. Further, in the report by  Lutheran Immigration and Refugee Service, service providers noted that  new immigrants with limited banking experience were generally unclear  about what happens to money they deposit and how they can access these  funds; many are also new to the very concept of a credit system.  Additionally, one service provider told us that many new immigrants do  not have their parents’ or previous generations’ financial experiences and  lessons in the United States to learn from.
The role of culture. Cultural differences can play a role in financial literacy  and the conduct of financial affairs because different populations have  dissimilar norms, attitudes, and experiences related to managing money.  For example, in some cultures the practice of borrowing money and  carrying debt is viewed negatively, which may deter immigrants from such  cultures from taking loans to purchase homes or cars and build credit  histories. In focus groups of Asian homebuyers conducted by Freddie Mac,  most participants expressed an aversion to debt, and some participants  said they were accustomed to spending cash rather than using credit cards  because they do not like to be in debt. Religious traditions can also  influence the use of credit. The Lutheran Immigration and Refugee Service  report notes that Muslims who adhere to religious prohibitions against  receiving and paying interest face challenges participating in such  mainstream financial products as home mortgages and retirement plans.
Mistrust of financial institutions. Some immigrants’ attitudes toward  financial institutions have been shaped by their observations and  experiences in their home countries. One academic paper on immigrants’  access to financial services noted that some U.S. immigrant households do  not have bank accounts because of mistrust of banks, particularly if  financial institutions in their home countries were marked by instability,  lack of transparency, or fraud. A study sponsored by the Inter-American  Development Bank similarly noted that negative attitudes towards  depository financial institutions or a desire to keep financial information  private has been an obstacle to using banks among some Hispanic  immigrants.
Income and socioeconomic status. Some studies have reported a  correlation between income and financial literacy. As noted earlier,  individuals with limited English proficiency have lower incomes, on  average, than the U.S. population as a whole. In a 2008 survey of young  American adults for the Jump$tart Coalition for Personal Financial  Literacy, respondents whose family income was less than $20,000 per year  received an average score of about 43 percent on a test of personal finance  basics, as compared to a score of about 52 percent for students whose  parents’ income was more than $80,000. A few financial service providers  to immigrant communities we spoke with noted that low-income  individuals may not have access to tools, such as educational courses and  Internet sites, to improve their money management skills and overall  financial literacy. The financial education report by the National Council  of La Raza stated that the many Hispanic low-wage earners with work  schedule restrictions or multiple jobs were limited in the ways in which  they could participate in financial education programs.
Education. As noted earlier, there is evidence that people in the United  States with limited English proficiency are more likely to have low  educational attainment. Moreover, overall levels of education can affect  financial literacy. For example, the Jump$tart Coalition survey found a  correlation between test scores on the basics of financial literacy and the  educational attainment of test takers and their parents. Similarly,  researchers with the Board of Governors of the Federal Reserve System  who reviewed consumer survey data from the University of Michigan  found a statistically significant correlation between respondents’ levels of  formal education and their ability to correctly answer a series of true-false  questions concerning savings, credit, and other general financial  management matters. Staff at organizations that serve or advocate for  immigrants told us that one factor in the ability to conduct financial affairs  effectively is basic literacy—that is, the ability to read or write even in  one’s native language. People with limited English proficiency who are not  literate in any language face clear barriers to learning about and  understanding financial issues, which can greatly impede their ability to  conduct their everyday financial affairs.
Some service providers and advocates told us that because factors other  than language affect the financial literacy of people with limited English  proficiency, translations of financial products and financial education  materials may not be sufficient to address obstacles to financial literacy.  While overcoming language barriers is important, they said, efforts to  improve the financial literacy and well-being of people with limited  English proficiency must also address underlying cultural and  socioeconomic issues.
section_title: Consumers with Limited English Proficiency Are More Likely to Use Alternative Financial Services and May Be More Susceptible to Fraudulent and Predatory Practices
paragraphs: Evidence suggests that people with limited English proficiency are more  likely than the U.S. population as a whole not to have accounts at banks  and other mainstream financial institutions. This condition is commonly  referred to as being “unbanked” or “underbanked.” A 2009 national  survey by the Federal Deposit Insurance Corporation (FDIC) found that  35.6 percent of households where only Spanish was spoken at home were  unbanked, compared with 7.1 percent of households in which Spanish was  not the only language spoken at home. Similarly, another study on the  use of financial services by Hispanic immigrants found that they were  significantly more likely to be unbanked than nonimmigrants, although it  did not report specifically on the role of language. The FDIC survey  found that among households who had never had a bank account, 9.1 and  6.9 percent cited that it was because “banks do not feel comfortable or  welcoming” and “there are language barriers at banks,” respectively.  Further, as noted earlier, immigrants may come from countries with  corrupt or insecure financial systems, which can diminish their trust in  mainstream financial institutions in the United States. In addition, persons  with limited English proficiency who are undocumented may be further  deterred from opening a bank account because of fear that the institution  will share personal information with immigration authorities, according to  the Lutheran Immigration and Refugee Service study and a few service  providers we spoke with. According to FDIC, unbanked or underbanked  consumers may pay excessive fees for basic financial services, be more  vulnerable to loss or theft, and struggle to build credit histories and  achieve financial security.
FDIC has also reported that households that are unbanked are more likely  to use alternative financial services, and about two-thirds of these  households used pawn shops, payday loans, rent-to-own agreements,  nonbank money orders, or check-cashing services in the past year. There  are a number of reasons why populations with limited English proficiency  may be more likely to use alternative financial services. First, alternative  financial service providers, such as payday lenders and check-cashing  outlets, generally cluster in and around neighborhoods with lower-income,  minority, and Hispanic families, according to a 2004 analysis by the Urban  Institute. The Lutheran Immigration and Refugee Service study said that  in each of the five cities researchers visited, alternative financial services  appeared to be widely available in neighborhoods where new immigrants  lived, noting that immigrants were often aggressively targeted for these  services through direct mail, telemarketing, and door-to-door sales. Some  immigrants are attracted to alternative financial service providers because  these institutions often cater specifically to their communities by, among  other things, requiring little or no documentation, hiring staff who speak  the language of their community, and offering convenient hours. However,  concerns exist about the widespread use of such alternative financial  service providers since the loan fees they charge are generally much  higher than those charged by traditional financial institutions, and other  terms and conditions of such loans are often unfavorable to the borrower.
Further, evidence suggests that some populations with limited English  language skills may be more susceptible to fraudulent and predatory  practices. The Lutheran Immigration and Refugee Service report noted  that some immigrants may trust financial service providers who speak  their native language even if they do not understand the legalities of  agreements they make. Service providers that work with limited English  proficient communities told us that in some cases unscrupulous  individuals use their ability to converse fluently in someone’s native  language to build trust and then take advantage of the person. Some  service providers described to us scams they have observed in which  individuals with limited English skills are told the terms of an agreement  orally in their native language and then asked to sign a written contract in  English with terms different than those described. Credit counselors we  spoke with said that having limited proficiency in English can make it  difficult to understand the distinctions between various financial products.  The report by the Appleseed organization notes that language and cultural  barriers may also make it harder for immigrants, including those with  limited English skills, to register a complaint about an abusive practice or  product.
The Federal Trade Commission has similarly noted that Hispanic  immigrants, especially those with limited English proficiency, may be  more susceptible to consumer fraud such as credit card fraud and other  abusive practices. According to the agency, it pursued 37 cases involving  Spanish-language frauds targeted at Hispanic consumers as part of its  Hispanic Law Enforcement and Outreach Initiative between April 2004 and  September 2006. The Federal Trade Commission has also translated  dozens of its consumer education publications into Spanish, in part to  reduce the susceptibility of Spanish-speaking consumers to fraud and  scams. Several service providers we spoke with said that financial  education can play an important role in helping consumers with limited  English proficiency avoid abusive and predatory practices.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of the Treasury and  the Federal Trade Commission for their review and neither agency had any  comments.
We are sending copies of this report to the Secretary of the Treasury, the  Chairman of the Federal Trade Commission, and interested congressional  committees. In addition, the report will be available at no charge on GAO’s  Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  me at (202) 512-8678 or cackleya@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made major contributions to this report  are listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: Our reporting objective was to examine the extent, if any, to which  individuals with limited English proficiency are impeded in their financial  literacy and conduct of financial affairs. To address this objective, we  conducted a review of relevant literature related to financial literacy  among immigrants and people with limited English proficiency. To identify  existing studies, reports, articles, and surveys, we conducted searches of  several databases, including Business & Industry, Banking Info Source,  and EconLit, using key words to link financial literacy or financial  education to language, English proficiency, and other concepts. We also  asked for recommendations for studies, reports, and articles from  academic experts and from representatives of organizations that address  issues related to financial literacy or limited English proficient  communities. We also conducted focused Internet searches, and we  reviewed the bibliographies of reports we had already obtained to identify  additional material. Each of the documentary sources cited in our report  was reviewed for methodological strength and reliability and determined  to be sufficiently reliable for our purposes. We performed our searches  from August 2009 to April 2010.
To describe the U.S. population of individuals with limited English  proficiency, we obtained and analyzed data from the United States Census  Bureau’s 2006-2008 American Community Survey and the 2000 U.S.  Census. The Census Bureau does not define the term “limited English  proficient.” As such, we developed our measures of the limited English  proficient population based on questions in the American Community  Survey that asked “Does this person speak a language other than English  at home?”, “What is the language?”, and “How well does this person speak  English?” For our purposes, we included in the limited English proficient  estimate individuals over the age of 18 who self-reported that they speak  English “not well” or “not at all”. We determined the total number of  limited English proficient individuals as compared to the population that is  proficient in English (those who reported they speak English “very well”  or “well”) for both the 2006-2008 American Community Survey data and  the 2000 U.S. Census data to show the growth over a period of time.  Because the American Community Survey data is a probability sample  based on random selections, this sample is only one of a large number of  samples that might have been selected. Since each sample could have  provided different estimates, we express our confidence in the precision  of our particular sample’s results as a 95 percent confidence interval (e.g.,  plus or minus 4.5 percentage points). This is the interval that would  contain the actual population value for 95 percent of the samples that  could have been drawn. In this report, all Public User Microdata Area level  percentage estimates derived from the 2006-2008 American Community  Survey have 95 percent confidence levels of plus or minus 4.5 percentage  points or less, unless otherwise noted.
We also conducted interviews at and gathered relevant studies and  educational materials from federal agencies, organizations that provide  financial literacy and education, and organizations that serve or advocate  for populations with limited English proficiency. We interviewed staff at  the Department of the Treasury’s Office of Financial Education, Federal  Trade Commission, Internal Revenue Service, Federal Deposit Insurance  Corporation, and the Department of Health and Human Services’ Office of  Refugee Resettlement. We also interviewed representatives and gathered  documentation from organizations that address financial literacy issues,  including Consumer Action, Consumer Federation of America, and the  Jump$tart Coalition for Personal Financial Literacy; organizations that  represent the interests of populations that include individuals with limited  English proficiency, including the Asian American Justice Center, National  Coalition for Asian Pacific American Community Development, National  Council of La Raza, and Southeast Asia Resource Action Center; and  organizations that represent financial service providers, including the  American Bankers Association, Credit Union National Association, and  National Foundation for Credit Counseling. We also gathered information  from three academic researchers who focus on issues related to financial  literacy or limited English proficiency.
In addition, we conducted a series of 10 focus groups to discuss the  barriers that individuals with limited English proficiency may face in  improving financial literacy and conducting their financial affairs.  Information we collected from our focus groups and from the  organizations we contacted provided context on the issues discussed, but  this information is not generalizable to the entire populations represented  by the focus groups. Further, our work may not have addressed all of the  different perspectives of the many diverse cultures comprised by people  with limited English proficiency in the United States. For each focus  group, we used a series of semi-structured questions to learn about  participants’ observations and experiences related to language and other  barriers that impede financial literacy and how they address these  challenges. The focus groups included:    1 with 11 limited English proficient consumers whose native language was  Spanish and who were enrolled in English-language classes sponsored by  the Hispanic Committee of Virginia;   1 with 11 limited English proficient consumers whose native language was  Vietnamese and who utilize the services of Boat People SOS, a community- based organization based in the Washington, D.C. area;    4 that collectively included 20 staff members representing 15 financial  institutions—large banks, community banks, and credit unions across the  country whose clients include a large number of limited English proficient  individuals with a wide range of native languages;   1 with 10 staff members representing 5 credit counseling and financial  education agencies that provide services in multiple languages;   2 that collectively included 19 staff members representing 16 nonprofit  community-based organizations that largely serve Hispanic communities;  and   1 with 9 staff members representing 8 nonprofit community-based  organizations that largely serve a variety of Asian communities.
We conducted our work from August 2009 to May 2010 in accordance with  all sections of GAO’s Quality Assurance Framework that are relevant to  our objective. The framework requires that we plan and perform the  engagement to obtain sufficient and appropriate evidence to meet our  stated objective and to discuss any limitations in our work. We believe that  the information and data obtained, and the analysis conducted, provide a  reasonable basis for any findings and conclusions in this product.
section_title: Appendix II: Examples of Financial Education Targeted at Populations with Limited English Proficiency
paragraphs: Many entities—including federal agencies, state and local governments,  financial institutions and other private sector entities, schools, community- based agencies, and other nonprofit organizations—sponsor financial  literacy and education initiatives. These efforts cover a wide variety of  topics, target a range of audiences, and include classroom curricula, print  materials, Web sites, broadcast media, and individual counseling.  Highlighted below are selected examples of initiatives taken in the federal,  nonprofit, and private sectors that seek to reach, in particular, individuals  with limited English proficiency.
subsections: section_title: Federal Agencies
paragraphs: About 20 different federal agencies operate numerous financial literacy  programs and initiatives, several of which are targeted in part or whole at  individuals with limited proficiency in English. The federal government’s  multiagency Financial Literacy and Education Commission sponsors the  My Money Web site (www.MyMoney.gov), which serves as a portal to  more than 260 other federal financial education sites. The site has both  English- and Spanish-language versions. The commission also sponsors a  financial literacy telephone hotline that supports both English- and  Spanish-speaking callers, as well as a financial literacy “tool kit” of  publications available in English and Spanish. One of the most widely used  federal financial literacy programs is the Federal Deposit Insurance  Corporation’s “Money Smart,” a financial education curriculum designed  to help individuals who are outside the financial mainstream develop  financial skills and positive banking relationships. The instructor-led  curriculum is offered in English, Spanish, Chinese, Hmong, Korean,  Vietnamese and Russian, while the computer-based curriculum is available  in English and Spanish. The Federal Trade Commission has developed  more than 150 culturally appropriate educational publications in Spanish,  according to an agency official, many of which cover financial topics, and  its Spanish-language Web site received more than 1 million hits in fiscal  year 2009. The Federal Trade Commission has also created Spanish- language videos on such topics as avoiding foreclosure rescue scams, and  agency staff have provided interviews on financial issues to local and  national Spanish-language media.
section_title: Nonprofit Sector
paragraphs: A variety of community-based and national nonprofit organizations  throughout the nation have financial literacy initiatives aimed at  populations with limited proficiency in English. Many housing counseling  agencies approved by the Department of Housing and Urban Development  offer services in multiple languages. For example, the Minnesota Home  Ownership Center has interpreters trained in homeownership issues and  financial terminology and offers homebuyer-education classes in Spanish,  Cambodian, Russian, and Hmong. Some community-based organizations  also provide financial literacy information through their English as a  Second Language programs, using resources such as the Money Smart  curriculum, which includes such topics as the U.S. credit system and  credit scores, and purchasing a home. Some agencies offer individual  counseling. For example, two large nationwide providers of credit  counseling and financial education can conduct telephone sessions in at  least 15 languages directly and about 150 languages using a translation- services contractor. Many nonprofit agencies offer written publications in  multiple languages intended to improve consumer financial literacy. For  example, the National Coalition for Asian Pacific American Community  Development publishes financial literacy resources in Chinese, Korean,  Vietnamese, Hindi, Urdu, and Samoan. Similarly, Consumer Action posts  to its Web site consumer financial information in several languages.
section_title: Private Sector
paragraphs: Several financial institutions and other private sector entities have  sponsored financial literacy initiatives aimed at consumers who speak  languages other than English. For example, Freddie Mac’s CreditSmart®— a financial education curriculum designed to help consumers build and  maintain better credit and become homeowners—is available in Spanish  through CreditSmart Español and in Chinese, Korean, and Vietnamese  through CreditSmart Asian. The American Bankers Association provides a  newsletter in Spanish called Money Talks that is tailored to varying age  groups and offers personal finance booklets in Spanish on such topics as  saving, credit, budgeting, checking accounts, and mortgages. The Credit  Union National Association offers “El Poder es Tuyo,” a Spanish-language  personal-finance Web site that provides culturally relevant articles, videos,  and worksheets specifically designed for Hispanics.
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Jason Bromberg (Assistant  Director), Grant Mallie, Linda Rego, Rhonda Rose, Jennifer Schwartz,  Andrew Stavisky, and Betsey Ward made key contributions to this report.
section_title: Related GAO Products
subsections: section_title: Reports Related to Financial Literacy
paragraphs: Financial Literacy and Education Commission: Progress Made in  Fostering Partnerships, but National Strategy Remains Largely  Descriptive Rather Than Strategic. GAO-09-638T. Washington, D.C.: April  29, 2009.
Financial Literacy and Education Commission: Further Progress  Needed to Ensure an Effective National Strategy. GAO-07-100.  Washington, D.C.: December 4, 2006.
Credit Reporting Literacy: Consumers Understood the Basics but Could  Benefit from Targeted Educational Efforts. GAO-05-223. Washington,  D.C.: March 16, 2005.
Highlights of a GAO Forum: The Federal Government’s Role in  Improving Financial Literacy. GAO-05-93SP. Washington, D.C.:  November 15, 2004.
section_title: Reports Related to Limited English Proficiency
paragraphs: Centers for Medicare and Medicaid Services: CMS Should Develop an  Agencywide Policy for Translating Medicare Documents Into Languages  Other Than English. GAO-09-752R. Washington, D.C.: July 30, 2009.
Medicare: Callers Can Access 1-800-MEDICARE Services, but  Responsibility within CMS for Limited English Proficiency Plan  Unclear. GAO-09-104. Washington, D.C.: December 29, 2008.
VA Health Care: Facilities Have Taken Action to Provide Language  Access Services and Culturally Appropriate Care to a Diverse Veteran  Population. GAO-08-535. Washington, D.C.: May 28, 2008.
No Child Left Behind Act: Education’s Data Improvement Efforts Could  Strengthen the Basis for Distributing Title III Funds. GAO-07-140.  Washington, D.C.: December 7, 2006.
No Child Left Behind: Education Assistance Could Help States Better  Measure Progress of Students with Limited English Proficiency.  GAO-07-646T. Washington, D.C.: March 23, 2007.
Child Care and Early Childhood Education: More Information Sharing  and Program Review by HHS Could Enhance Access for Families with  Limited English Proficiency. GAO-06-807. Washington, D.C.: August 17,  2006 (Spanish Summary: GAO-06-949; Chinese Summary: GAO-06-950;  Korean Summary: GAO-06-951; Vietnamese Summary: GAO-06-952).
No Child Left Behind Act: Assistance from Education Could Help States  Better Measure Progress of Students with Limited English Proficiency.  GAO-06-815. Washington, D.C.: July 26, 2006.
Transportation Services: Better Dissemination and Oversight of DOT’s  Guidance Could Lead to Improved Access for Limited English-Proficient  Populations. GAO-06-52. Washington, D.C.: November 2, 2005 (Spanish  Summary: GAO-06-185; Chinese Summary: GAO-06-186; Vietnamese  Summary: GAO-06-187; Korean Summary: GAO-06-188).