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Quiz: do you know your money jargon?

Getting to grips with financial jargon is no easy task, and that’s worrying when financial decisions are some of the most important we make. Test yourself in our quiz to see how much money jargon you know…

In January our Money team quizzed over 1,000 people on their knowledge of common financial terms. The results? Let’s just say perhaps some banks need to do more to improve their customers’ understanding of key financial terms.

For example, only a third of people understood the term ‘account buffer’, but this doubled when explained in jargon-free language. And to add to the confusion, one insurance company used the Latin term ‘terra firma’…

How much of the jargon do you understand?

Our test below consists of 10 questions on common financial jargon, so give it a go and see if you’re up to speed. Good luck! We’ll let you know the answers next week.

1. In banking, what is EAR?

(a) Interest earned over a year
(b) Representative interest rate describing interest paid for staying overdrawn for a year, excluding fixed fees
(c) Amount paid for staying overdrawn for a year

2. What is AER? 

(a) The monthly interest rate on positive balances in your account
(b) Representative interest rate describing interest earned over a year, taking into account how often the interest is paid and the effect of compounding
(c) The amount you can spend once your authorised overdraft has been spent

3. What is a ‘fault claim’ in insurance

(a) No one is at fault
(b) Either you’re at fault or your insurer can’t recover costs from anyone else
(c) You’re at fault

4. What is an ‘ex gratia payment’ in insurance? 

(a) Optional upgrade payment by the policyholder
(b) Any optional payment made by the insurer
(c) Payment by an insurance firm on a successful claim

5. What’s an insurance ‘excess’? 

(a) The difference between payout and claim
(b) The fee for a policy upgrade
(c) The first amount of a claim the customer has agreed to pay as a part of their policy

6. What is ‘no-claims bonus protection’? 

(a) A bonus discount if you haven’t claimed
(b) It ensures you won’t pay an increased premium when you make claims
(c) It protects your no-claims bonus if you make fewer than a certain number of claims

7. What is AMC? 

(a) The total amount of charges levied by fund managers
(b) The commission earned by fund managers
(c) The charge levied by fund managers to cover ongoing management only

8. What is an OEIC?

(a) Fund focusing solely on investing in government bonds
(b) Investment company or fund which may adjust investment criteria and fund size
(c) Fund focusing on emerging market investments

9. In investments, what are ‘equities’?

(a) A debt owned by an investor which can be traded as an asset
(b) An investment fund
(c) Shares in a company

10. Can you work out the effect of the terms in the following banking scenario? 

Catherine has an interest-free and fee-free Formal Overdraft of £500. She has a daily Informal Overdraft Usage Fee of £5 and an Account Buffer of £10. On Monday her account balance is zero – she buys a new laptop for £500 and some food for £5. On Thursday her salary of £3,000 is paid into her account.

Which of the following statements is true?

(a) Catherine’s bank will charge her £15
(b) Catherine’s bank won’t charge her anything
(c) It’s impossible to know how much she will be charged

So write your answers below and we’ll let you know the answers next week. And try not to look at others’ answers until you’ve done yours!

Comments
Member

Given there is no surrounding context I think it is a little difficult to expect anyone to get a decent score. Even more so if one does not have bonds/funds, or an overdraft and have your interest off-set between you accounts.

I am not at all convinced this quiz will prove anything.

Member

Many of us will have a DMF in our car but unless there is a problem we will be happy ignorance of what the acronym means.

” Let’s just say it’s worth some people spending a little time brushing up on the jargon.”

My previous post was suggesting that not knowing some acronyms is not a sign of financial incompetence. Simply you have not the need to know at this point in time. Making readers feel inadequate about this “lack” is not helpful.

This is a helpful article:
http://www.which.co.uk/money/savings-and-investments/guides/different-types-of-investment/are-fund-charges-eating-into-your-returns/

Member

Hello Diesel, it’s just a bit of fun for the community 🙂 We weighed up whether to provide some useful links for revision on this quiz, but decided against to see whether people would like to do it blind.

I’ll go first! C, B, B, A, C, A, B, C, A.

A fair few of those were guesses. Let’s see how I do…

Member

I am glad it is a light-hearted quiz. Perhaps the comment on people who were tested in January needing to brush up on their jargon needed a smiley. : )

Member

Fair point, it does sound a little mean 😉

Member

Hi Diesel, you’re right it does come across a bit harsh – I’ve given it a little tweak 🙂

Member

Badly. Wear the dunces’ hat Patrick.

Member

Holds head in shame 🙁 Somebody had to get you guys going! It’d be no fun if I got them all right 😉

Member

We know your strategy by now. 🙂 Now how about a quiz about something more interesting than financial jargon.