1. Chapter 24 section 2 notes
Saving Money

2. Why save?
Pay your self means every time you get paid you should take some or put it into savings and keep it for yourself.
There is 2 reasons to have a savings account: 1 to have funds available to meet a financial emergency, 2 to be able to achieve financial goals.

3. Types of savings Accounts
Two plans financial institutions use are regular savings accounts and time deposits
REGULAR SAVINGS ACCOUNTS: also called passbook accounts are very convenient and flexible. You can make deposits and withdrawals at any time.
TIME DEPOSITS: are used when you can deposit a lump-sum amount for a longer period of time. A depositor will puts in money and agrees not to withdraw any. The bank also pays higher interest rates

4. Figuring Interest Rates
Interest rates fluctuate from time to time .interest rates also vary according to the type of savings plan.
ANNUAL INTEREST RATES: the law requires banks and other financial institutions to clearly state in their ads the true annual interest rate paid on savings.
Interest is figured by multiplying rate X time (in years) X principal ( X 1 X $100 =$5.25)

5. FREQUENCY OF INTEREST COMPOUNDING: it is very easy to understand interest you, want the highest interest for your money. More important than interest rate is how often the interest is compounded. Compounding is the adding of interest to a persons account at the end of a time period.
INTEREST PAY PERIODS : The ad for university Bank says that the bank compounds interest daily and pays quarterly.

6. ANNUAL PERCENTAGE YIELD: when comparing one savings account with another it is useful to know the annual percentage yield (APY). That figure will tell you the actual yearly interest and compounding. The higher the apy the better deal you'll receive. Recent federal legislation nicknamed “truth-in-savings” requires banks and other savings institutions to provide this information to customers.

7. OTHER INFORMATION : If you know the basic principals of figuring interest you should be able to understand and compare the methods used by different institutions. If you shop around remember that savings institutions may differ a great deal as to how they figure interest. Try to narrow down your choices to a few institutions offering the highest apy.