OBJECTIVES 3-3 3.3 SAVINGS ACCOUNTS Banking 11/19/2018 3-3 3.3 SAVINGS ACCOUNTS OBJECTIVES Learn the basic vocabulary of savings accounts. Compute simple interest using the simple interest formula. Chapter 1

Key Terms savings account interest interest rate principal simple interest simple interest formula statement savings minimum balance money market account certificate of deposit (CD) maturity

What types of savings accounts do banks offer customers? What banking services does your family use? Where does the money that banks lend out for loans come from? What is the value of compound interest? What are the advantages of direct deposit?

CHECK YOUR UNDERSTANDING Write the following five interest rates in descending order (greatest to least): 5.51%, 5 %, 5 %, 5.099%, 5.6% Solution: 𝟓 𝟓 𝟖 %, 𝟓.𝟔%, 𝟓.𝟓𝟏%, 𝟓 𝟏 𝟐 %, 𝟓.𝟎𝟗𝟗%

CHECK YOUR UNDERSTANDING Mae has $891 in her account. A $7 fee is charged each month the balance is below $750. She withdraws $315. If she makes no deposits or withdrawals for the next x months, express her balance algebraically. Solution: $891 - $315 = $576 Algebraically: 576 – 7x

CHECK YOUR UNDERSTANDING How much simple interest is earned on $4,000 in 3½ years at an interest rate of 5.2%? Solution: Use I = prt. Interest = $4000(.052)(3.5) = $728

CHECK YOUR UNDERSTANDING How much simple interest would $800 earn in 300 days in a non-leap year at an interest rate of 5.71%? Round to the nearest cent. Solution: Use I=prt. Interest = $800 .0571 300 365 =$37.55

CHECK YOUR UNDERSTANDING How much principal must be deposited in a two-year simple interest account that pays 3¼% interest to earn $300 in interest? Solution: Use I = prt. $300 = p(.0325)(2) p = $4615.38

CHECK YOUR UNDERSTANDING How long will it take $10,000 to double at 11% simple interest? Solution: Use I = prt. Interest = 2 10,000 −10,000=$10,000 $10,000=$10,000(.11)(𝑡) t = 9.09 years or about 9 years.

CHECK YOUR UNDERSTANDING Marcos deposited $500 into a 2.5-year simple interest account. He wants to earn $200 interest. What interest rate must the account pay? Solution: Use I = prt. $200 = $500(r)(2.5) r = .16 or 16%