Chapter 3 – Savings Accounts, CDs and Money Market Accounts Let’s make some money!!! Next Slide

Section 3.6 Savings Account Objectives Calculate simple interest on savings deposits Continue

Simple Interest People open a savings account to keep their money safe and they can earn interest on that money Interest is money paid to an individual or institution for the privilege of using their money As with a checking account, you can deposit and withdraw money Get a receipt as proof of the transaction Let’s calculate some interest - next slide….

Simple Interest Several types of savings accounts Passbook account – simple interest figured quarterly – 4x a year – interest usually paid Jan 1, Apr 1, July 1 and Oct 1 Sometimes interest is paid twice a year or semi-annually (every 6 months) Finding simple interest Interest = Principal x Rate x Time (I=PRT) Let’s Try One…

Example Problem Find the interest for six months on $400.60 at 5 1/2 % annual interest paid. Now try the calculation…… When you are ready click here for the answer….

Example Problem (Answer) Find the interest for six months on $400.60 at 5 ½ % annual interest paid semiannually I = $400.60 x 0.055 x ½ = $11.016, or $11.02 (interest for six months) Did you get this answer? Let’s try 2 more problems……

Check Your Understanding Problem 1 What interest is paid for three months on $860 at 2 ¼ % interest paid quarterly? Now take a few minutes and try to find the amount of interest?....Click to see the answer.

Check Your Understanding Problem 1 Solution I = $860 x 0.0225 x ¼ = $4.837, or $4.84 How did you do? Let’s try one more…click here.

Check Your Understanding Problem 2 Find the interest for six months on $350 at 3.1% annual interest paid semiannually? Think about it, take your time and when you are ready to see the solution, click here.

Check Your Understanding Problem 2 Solution I = $350 x 0.031 x ½ = $5.425 or $5.43 So how did you do? If you feel you need some extra help click on the link below and you will find some more explanation on calculating simple interest. http://www.ehow.com/how_2120905_calculate- simple-interest.html?ref=Track2&utm_source=ask If don’t need any additional help click here and be prepared to cut loose and have some fun!!!!

Extra Help If you are reading this slide you are in need of some additional help, please click the link below for some additional information. After viewing more information you can proceed to the last slide, just click here, prepare to turn up the volume and cut loose a little…..

Money Talks…… ....so start saving!!!