Quiz: Do you have the A-Level maths skills needed to understand your bank?
If you've ever fretted about your finances, you can breath a sigh of relief – from APRs to ISAs and every acronym in between, understanding bank statements requires an A-Level knowledge of maths, it turns out.
Jargon terms are making it impossible for most people to judge whether they are getting a good deal from their bank.
More than three quarters of us have a credit agreement in the form of a mortgage, loan or credit card, but 86 per cent admitted that they had little understanding of what representative APR is, for example, according to research by digital challenger bank Tandem.
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No wonder then, that 94 per cent of people think banks should use simpler language.
And a professor of mathematics has now demonstrated the difficulty of some of the concepts involved in understanding financial products, in the form of an exam paper demonstrating the skills you need.
“The general public requires a consistently high level of mathematics to understand and make sense of some fairly common financial situations," said the University of Bath's Dr Christian Yates.
"Not only do they have to get their heads around the myriad terms and acronyms that banks use, but they often need to have A-Level standard maths to accurately understand the ramifications of banking products, or simply how to best manage their finances. Even at degree level, students would struggle with some of these problems which require long, complicated calculations.”
The many misunderstandings of finance include, 44 per cent who could not classify correctly how base rates work, almost half did not understand share prices or tracker mortgages, and a third did not know that ISA stands for Individual Savings Account, the survey of 2,000 people reveals.
Think your maths is good enough to understand basic banking? Take the quiz below to find out, based on the professor's exam paper.
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