The FINRA Investor Education Foundation published a report on April 11 that made startling reading. In summary, it suggested that on average women pay more for their credit cards than men do. Can that be right? It seems so, although it has nothing to do with discrimination on the part of credit card companies. The problem seems to be that there are more women in the population whose financial literacy is challenged.

Credit cards and negative behavior

FINRA listed five “negative behaviors” and used data from the huge, coast-to-coast, 28,000-strong National Financial Capability Study, which was conducted in 2009, to identify any gender biases in those behaviors. In only one (using cards to get cash advances) did men score worse than women, and then by only 1 percent, which may well be within the study’s margin of error. Here are the other four:

1. Carried forward balances (revolved credit): 55 percent of men, but 60 percent of women.
2. Made minimum payments: 38 percent of men, but 42 percent of women.
3. Paid late fees: 23 percent of men, but 29 percent of women.
4. Paid over-the-limit fees: 15 percent of men; 16 percent of women. (Again, this may be within the margin of error.)

When it came to those who reported more than one of these negative behaviors, 33 percent of men, but 38 percent of women admitted to doing so.

Financial literacy and costly credit cards

When the study examined the relationship between financial literacy and negative behaviors, it found that women and men scored the same if they were highly financially literate. It was only among those who had low levels of knowledge about money matters that the gender bias emerged. In a press release, FINRA Foundation president Gerri Walsh makes this point:

For women, having a high level of financial literacy appears to pay off. The gender gap for costly credit card behaviors disappears for women with high levels of financial literacy, and after controlling for demographic characteristics like age and income. Becoming more financially literate is a great step that any woman can take to keep more of her hard-earned money in her pocket.

Credit card interest rates and women

So far, so straightforward: Many women would benefit from upping their financial literacy. But the FINRA report went on to identify another issue, which is harder to explain or resolve.

Leaving aside financial literacy, the credit card interest rates women pay are on average about half a percentage point higher than the ones men do. So women with low financial literacy paid on average 15.0 percent while men in the same group paid 14.5 percent. Surprisingly, that gap existed even among those who were highly financially literate: women 14.7 percent; men 14.1 percent. The study’s author, Gary R. Mottola, Ph.D., admitted that the causes of these spreads were not apparent, and called for more research.

The importance of comparison shopping

Your blogger has never knowingly allowed a total lack of data, knowledge or qualifications to prevent him from pontificating on any given subject, so here’s his entirely unsubstantiated theory. Could it be that many hard-pressed women, juggling family, home and job, are disinclined to invest their time in comparison shopping for their credit cards?

If so, let’s hope that more and more time-stressed women find their way to sites like this one. Easily-navigable sites such as IndexCreditCards.com or CardRatings.com can help identify in minutes the best credit cards on offer.

Published 04/25/12 (Modified 05/01/12)