Are we living in the most financially empowered era in history, or the most financially confused?
Despite unprecedented access to information, half of American adults have lacked basic financial literacy for eight consecutive years, according to recent analysis. That knowledge gap came at a steep cost in 2024—over $243 billion, or about $1,015 per person, based on data from the Tax Foundation and World Economic Forum.
And this isn’t just about low-income households. A report from Insider found that people with poor financial literacy are “often worse off” than those with stronger money knowledge, even when they earn the same.
To understand where the confusion begins, forex experts at BrokerChooser analyzed U.S. and global search data to identify the most misunderstood financial terms and then broke down their meanings.
The Most Misunderstood Financial Term in America: “Equity”
The term “equity” generated over 70,000 monthly searches in the U.S. and nearly 250,000 globally, making it the most confusing financial word in the study. Despite being fundamental to both personal finance and investing, equity’s different meanings across contexts throw people off.
“While it’s a foundational concept, equity is often misunderstood due to its broad usage,” says Adam Nasli, Head Analyst at BrokerChooser. “In real estate, it’s what you actually own after subtracting mortgage debt. In stocks, it means ownership in a company.”
Understanding equity is crucial for evaluating investment opportunities and tracking personal net worth. Yet its ambiguity continues to trip up consumers, especially those navigating homeownership or the stock market for the first time.
APR, GDP, ETFs—More Jargon That Trips Us Up
APR (Annual Percentage Rate) ranked second with 55,100 U.S. searches each month. Despite appearing on nearly every loan and credit card agreement, many Americans confuse APR with a basic interest rate, missing the total cost of borrowing.
“Consumers often mistakenly focus on the interest rate alone,” Nasli explains. “But APR gives a fuller picture, helping people compare options and avoid hidden costs.”
GDP (Gross Domestic Product) placed third with 49,000 U.S. searches. While often mentioned in the news, GDP remains elusive to many. It measures the total market value of all goods and services produced within a country over a given period.
“Strong GDP growth can signal a healthy economy and encourage people to invest or spend,” Nasli says. “On the flip side, declining GDP can prompt caution.”
In fourth place was ETF (Exchange-Traded Fund), with nearly 49,000 monthly U.S. searches. ETFs are investment funds that trade on stock exchanges and offer low-cost exposure to entire markets or sectors.
“Think of it as a ready-made portfolio,” Nasli says. “They’re popular for their diversification and low fees—but still widely misunderstood.”
What It Costs to Stay Confused
Financial jargon isn’t just frustrating; it can be financially harmful. Misunderstanding terms like yield, principal, capital, and arrears (all among the top 10) can lead to costly mistakes, poor credit decisions, and missed investment opportunities.
“Financial literacy is no longer just a nice-to-have; it’s essential,” Nasli says. “With AI-enhanced scams and complex financial products, people need to understand these terms to protect themselves.”
Steve Cummings, founder of Budgets Make Cents, sees these challenges firsthand.
“Financial jargon creates invisible barriers,” Cummings says. “People aren’t failing because they’re irresponsible—they’re failing because no one ever explained how APR works, what equity really means, or why GDP matters. The system assumes you already know, and that’s where people get left behind.”
“You can work hard, save money, and still fall behind if you don’t understand how financial tools actually work,” he adds. “Financial education doesn’t have to be overwhelming. Start small, one concept at a time. Knowledge compounds, just like money.”
Measuring America’s Financial Confusion
To determine which financial terms Americans find most confusing, BrokerChooser used Ahrefs, a popular SEO tool, to analyze search queries combining each term with the words “meaning” and “definition.”
They reviewed 53 common financial terms and ranked them by monthly U.S. and global search volume. Data were collected on May 21, 2025, and reflect the average monthly queries for that period.
This project was launched in response to the ongoing decline in financial literacy, as documented by sources including the World Economic Forum, the Tax Foundation, and Insider.
Financial Literacy Is the First Step to Financial Security
Financial empowerment doesn’t require a finance degree, but it does demand clarity. Terms like equity, APR, and ETF are more than just buzzwords. They shape everyday decisions—from mortgages and loans to investments and retirement planning.
“Understanding these fundamentals can be the difference between financial strain and sustainable growth,” Nasli says. “It’s about making informed choices, asking smarter questions, and protecting your future.”
In a world where financial decisions are more complex and risks are more invisible, closing the literacy gap isn’t optional. It’s urgent.
