Over four in five (83%) adults are confident in managing their finances although this self-assurance is frequently a mask for confusion, according to Money Ready.

The financial education charity said the data demonstrates a "dangerous confidence trap", which leaves millions of Brits at risk of poor financial health.

Money Ready’s latest research found that when tested on fundamental financial concepts, 46% of the population incorrectly believe that all debt negatively impacts a credit score, while 37% assume all debt is inherently bad.

The study found that while people may feel comfortable with day-to-day financial management, their understanding falters when it comes to long-term wealth and stability.

Money Ready revealed that "significant percentages" admitted to having only some or very little understanding of investments (48%), pensions (47%), taxes (43%) and ISAs (41%).

The group stated that its research also highlighted myths around credit and banking, with 23% of adults believing it is impossible to do into debt if you only use a debit card.

Chief executive officer at Money Ready, Leon Ward, said: "Confidence is usually a good thing, but in personal finance, it can be a double-edged sword. If you believe you’re an expert, you might be less likely to double-check the fine print or seek additional guidance.

"Misconceptions like believing all debt is bad or thinking you can’t go into debt with a debit card can have real-world consequences. But this isn’t a personal failing. Most of our financial habits are shaped by circumstance and trial and error, not education.

"To build a financially savvy population, we need to move past ‘surface-level’ confidence and equip people with genuine, deep-rooted knowledge. That’s how confidence becomes capability."

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