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

2. 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

3. 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?

4. 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%

5. 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

6. 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

7. 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 = $ =$37.55

8. 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 = $

9. 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.

10. 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%