Definitions #1
a plastic card that allows you to borrow money up to a certain limit to make purchases. You need to pay back the borrowed amount, often with interest, if not paid in full by the due date
credit card
What is the primary purpose of a savings account?
to save money (not a trick question!)
The total amount of money that one owes to others. This can include loans, credit card balances, or any other financial obligations.
What is 36 months converted into years?
3 years (i.e. 36 divided by 12)
You are borrowing $200 from your dad to help buy a new gaming system. He said he is charging you interest to help you learn the value of money. Would you rather he charge you SIMPLE INTEREST or COMPOUND INTEREST? WHY? NOTE: You must include an acceptable reasoning for why you would choose what you chose, or no points will be given, even if you are correct.
Simple - simple interest grows slower, and you want to pay less interest when you are paying back a loan
the percentage charged or paid for the use of money over a period of time.
interest rate
Which type of bank account is suitable for everyday transactions and paying bills?
a chequing/checking account
The interest calculated only on the original principal amount (the initial amount of money) borrowed or invested. It does not take into account any interest that may have already been earned or paid.
simple interest
What is 4% as a decimal?
0.04
When might someone prefer a bank account with a higher monthly fee over a bank account with a lower monthly fee when choosing a bank account?
Acceptable answers: they are getting a better interest rate, number of transactions, etc.
a bank account that is designed for regular, everyday transactions. It allows you to write cheques, withdraw money, and make electronic transactions.
checking account
Jordan is comparing savings accounts at different banks. What should he consider in addition to interest rates when making a decision?
Acceptable answers: account fees, transaction limits, whether or not they have ATMs/online banking, etc.
Unacceptable answers: colour of banks logo, colour of credit card, etc.
The money earned or received by an individual or business through various sources, such as employment, investments, or business activities. It can be in the form of wages, salaries, interest, dividends, or profits, contributing to one's overall financial resources.
income
What is 0.012 as a percent?
1.2%
You are investing $10 000 into a high interest savings account. Would you rather earn SIMPLE INTEREST or COMPOUND INTEREST? WHY? NOTE: You must include an acceptable reasoning for why you would choose what you chose, or no points will be given, even if you are correct.
Compound - because compound interest grows more quickly, and you want to earn more interest when you are investing
a financial activity or exchange that involves the transfer of money, goods, or services between two parties. These can include buying and selling goods, paying bills, transferring funds, or any other business or personal financial interaction.
transactions
Why do banks set a minimum balance requirement for certain accounts?
to encourage people to keep more money in their accounts, which gives the bank more money to work with/make money with
Interest calculated on the initial principal amount as well as the accumulated interest from previous periods. It can lead to the growth of an investment or the increase of a debt over time.
compound interest
What is the simple interest earned on an investment of $100 at 2% interest for 1 year?
$2
You are getting a car loan. Would you rather your contract have you pay SIMPLE INTEREST or COMPOUND INTEREST? WHY? NOTE: You must include an acceptable reasoning for why you would choose what you chose, or no points will be given, even if you are correct.
Simple - because simple interest grows slower, and you want to pay as little as possible when you are paying back a loan
the act of purchasing assets such as stocks, bonds, or real estate with the goal of long-term financial growth. Hint: making money with your money
investing
Name a specific example of a 'transaction' that might count towards your 'transaction limit' for a bank account?
Buying something, withdrawing/taking out money, e-transfer, etc.
The smallest amount of money that must be maintained in a bank account to avoid fees or penalties (such as a monthly fee in a chequing account).
minimum balance
Sally earned interest in a high-interest savings account on a principal of $520 for 3 months. In January, she earned $1 in interest, in February, $1, and in March $1. What is the balance of her account?
$523. (Incorrect answer is $3, because $3 is only the interest she earned, but she still has the original/principal $520 in her account)
Which is better? Keeping $20 000 in a checking account or savings account?
A savings account (or investing it) - you will not earn very much (if any) interest by keeping large sums of money in a checking account. A checking account is used for more everyday transactions