Definitions
Simple Interest
Compound Interest
Savings Accounts
Random
100
______________ is a secure bank account that earns interest
Savings Account
100
A person deposits $5,000 in a savings account that earns 4% simple interest per year. How much interest will the person earn after 3 years?
$600
100
You deposit $5,000 in a savings account that earns 3% compound interest per year. How much will your investment be worth after 4 years if the interest is compounded annually?
$5,627.60
100
Easy to open with low minimum deposits
Lower interest rates compared to other options
Convenient branch access and ATM services
Traditional Savings Accounts
100
Why don’t basketball players ever go on vacation?
Because they would get called for "traveling"!
200
The cost of borrowing money or return on savings
Interest Rates
200
You deposit $15,000 into a savings account that offers 6.25% simple interest per year. After 8 years, you withdraw the total amount. How much total interest did you earn, and what is the total balance?
$22,500
200
An individual deposits $10,000 into a savings account that compounds interest quarterly at a rate of 4% per year. How much will the account be worth after 3 years?
$11,268.25
200
Good for: People who want to earn a more competitive rate on savings while minimizing fees.
High-Yield Savings Accounts
200
Which social media platform surpassed Facebook in the number of monthly active users in 2023?
Tik Tok
300
Simple Interest Formula
Formula: (P × r × t)
300
An individual deposits $20,000 in a savings account that earns simple interest at a rate of 4.5%. If the interest is paid every 2 years, how much interest will the individual earn in 10 years?
$9,000
300
A person invests $12,000 in a savings account that earns 6% compound interest annually. How much will the investment grow to in 8 years?
$19,126.20
300
What is a Cash Management account good for?
People who want to keep cash available to invest in their brokerage or retirement account.
300
What # was Ms. Collins in college?
15
400
Compound Interest Formula
400
A savings account offers 5.5% simple interest. If you deposit $18,000, how long will it take for your investment to earn $9,000 in interest?
9.09
400
You invest $20,000 at a rate of 5% compounded monthly. How much interest will you earn after 3 years?
$3,232.20
400
Higher rates for longer terms
CDs
400
The 5 things to consider when choosing the right savings account:
Interest rates
Access needs
Minimum requirements
Fee structures
Purpose of savings
500
When prices go up over time.
Inflation
500
You deposit $50,000 in a savings account offering a simple interest rate of 7% per year. How long will it take for your investment to earn $28,000 in interest?
8 years
500
You invest $15,000 in a savings account that compounds monthly at a rate of 6.5%. How much money will you have in the account after 7 years, if the interest is compounded monthly?
$22,348.28
500
Hybrid between checking and savings
Higher interest rates than traditional savings
Money Market Account
500
FDIC insured up to ____________
$250,000