Most people don't understand key financial terms like "APR", while many are confused about charges and don't know how interest rates are calculated, according to research published yesterday.

A report commissioned by the National Adult Literacy Agency (Nala) and EBS found that only 45 per cent of the general public could correctly identify the meaning of the term APR, which is the figure showing the rate of interest and other fees a borrower pays on their loan each year in percentage terms.

Some 18 per cent of those surveyed said that APR referred to the amount of money a bank or building society was willing to lend a customer, while 34 per cent said that the APR represented the monthly repayment on a loan.

Nala said people with literacy and numeracy difficulties preferred face to face contact with financial services providers, wanted more one to one help with branch transactions and were perplexed by the industry's moves to provide services over the telephone and the internet.

Confusion over the difference between bank charges and Government levies, and misunderstandings about how interest rates are calculated were recurring themes in discussion groups held by independent researchers Dr Pauline Conroy and Helen O'Leary.

Participants also reported experiences such as being asked to repeat out loud that they were unable to read and being too embarrassed to sign "X" instead of their name.

Difficulties understanding financial terms are not confined to disadvantaged groups, but extend into the middle classes and are a problem for society as a whole, the report warned.

Consumers are often too intimidated to ask for help, according to Nala.

The report found that the Republic lags behind other European countries, Australia and the US when it comes to financial literacy awareness and initiatives.

It makes 10 recommendations, including a call for the establishment of a new working group on financial literacy. It also recommends that the Money Advice and Budgeting Service (Mabs) be given a specific budget to develop work with local financial services providers and adult literacy groups.

Financial services providers should appoint an information officer in each branch to assist consumers with literacy and numeracy difficulties and use plain English in their printed material, it recommends.