Financial Literacy

Types of Financial Services  Savings Deposit  Payment Services Checking account  Borrowing Short-Term Long-Term

Electronic Banking Services  Direct Deposit  Automatic Payments  Automatic Teller Machines (ATMs) Debit Card/Cash Card  Credit Cards (Plastic Payments) Point-of-Sale Transactions

Types of Savings Plans  Regular Savings Accounts  Certificates of Deposit (CDs)  Money Market Accounts  U.S. Savings Bonds

Rate of Return  Formula: Divide Total Interest earned by the amount you deposited in the account. $1.50/50 = 3% Compounding Interest Interest paid on the original principal and on the accumulated past interest. (Interest paid on Interest) A = P(1 + r)n P: initial amount you borrow or deposit. (principal) r: rate of interest – shown as a percentage. (rate) n: number of years amount is deposited or borrowed for. A: amount of money accumulated after number of years, including interest.

Compounding Interest Example NP 1 (yearly)$ 10, (semi-annually)$ 10, (quarterly)$ 10, (monthly)$ 10, (weekly)$ 10, (daily)$ 10, Videos now.aspx?sectionid=2&uuid= de c912223ccf14

Annual Percentage Yield (APY)  If the APY is 4%, the bank pays $4 interest ($100 X 4% = $4)  The higher the APY the better the return  APY helps you determine the amount you can expect to earn on your money

Rule of 72  How long will it take for you to double your money  Divide 72 by interest rate to get years 72/6% = 12 years 72/9% = 8 years  Divide 72 by years to get interest rate 72/4 years = 18% interest 72/12 years = 6% interest