MSE News: BBC launches huge scientific test into money management

cepheus

nzseries1 wrote: »

I wanted to watch the videos, but I got "Not available in your area". Not sure what they've got against East London, but there you have it.

Have they started to use money there? Thought the currency was jellied eels?

Perhaps they think it is East London, South Africa.

cepheus

jamesd wrote: »

The answers are available by clicking on the text "Your money knowledge" at the upper right of the your results page.

Seems I got the Interest one wrong, I still get 9 years! How is this worked out?




On a £5,000 credit card debt at 19.9% APR interest, how long will it take to clear if you're making the minimum monthly repayments (defined as the higher of 2% or £5)?

• 2 years and 4 months
• 15 years and 6 months
• 60 years and 3 months
• It will never be paid off

The answer is 60 years and 3 months

dggar

I put 15yrs and
results said 60 yrs,
so I had a play with a spreadsheet.
I rounded the APR to 20% and assumed the following:-
Initial debt £5000 , 2% paid off at end of year one. ie £100.
Interest to be paid at end of year one (£4900*20%)= £980
Debt at start of year two (£4900+£980)= £5880.

2% paid off at end of year two (£117.60)
Interst to be paid at end of year two(£5762.40)*20%=£1152.48
Debt at start of year three (£5762.40+£1152.48)=£6914.88

Carrying this forward the debt just gets bigger each year.

Have I made an error or is the answer that the debt will never be cleared?

spheric

I think we were supposed to be calculating based off repaying 2% each month.

cepheus

This is how I did it

opens in Excel

savetilibleed

I completed section 9 or 9. It said
'The next task is loading. This may take a little while - please do not refresh the page...' and there it stuck for the last 10 minutes so far. Hmm what a waste of time. Pity.

Edit: I did it again and got an excellent score in almost everything.

redpete

liam8282 wrote: »

I'd rather not sign up with the BBC website to do a money survey.

Then no doubt receive bucket loads of :spam:

Why not just put the survey on this site?

I signed up to this bit of the BBC site ages ago and have never received any spam mail.

redpete

cepheus wrote: »

This is how I did it

opens in Excel

You've got £100 paid off each month, i.e. 2% of the initial balance. Surely this should be 2% of the outstanding balance each month (unless it is less than £5).

cepheus

Yes I think you are right, I assumed it was 2% of the original. That explains it.

Corrected Version

I now get 60 years 3 months!

I made an adjustment to the monthly interest as well it is 1.523 compound not 19.9/12

More than 20 grand to pay of 5 grand, that said inflation would eat into that I suppose.

dggar

spheric wrote: »

I think we were supposed to be calculating based off repaying 2% each month.

I realised this was where I made my error shortly after posting.
I corrected my spreadshheet and found that the repayment period is almost idependent of the inital debt as long as it it was in the range £100 to £50,000. The period seemed to be within + or - 10% of 60years.