1. http://www.moneysupermarket. com/savings/ Access You have £1000 that you wish to save You have £1000 that you wish to save You need access to your money instantly You need access to your money instantly You would like to avoid paying tax on the interest You would like to avoid paying tax on the interest We are going to look at a savings account comparison website Put your hand up if you spot a ‘good deal’ or you have any questions Let’s go shopping!

2. LESSON 16: Recommending savings accounts TO KNOW: TO KNOW: – What is meant by interest rates and the difference between gross and net interest TO UNDERSTAND: TO UNDERSTAND: – the principle of Annual Equivalent Rate and its impact on comparing savings accounts TO DO: TO DO: – Compare savings accounts to find the most suitable savings account for you

3. Interest rates Interest rate – The reward for saving and the cost of borrowing (% of the sum) Rate of interest on savings account depends on 1.Length of time money is ‘tied up’ (term) 2.The amount saved 3.Notice period 4.Whether it is internet-only

4. What was arguably the main benefit of saving money in an ISA? With many savings accounts, tax has to be paid on the interest ‘Gross’ p.a. – Interest rate BEFORE tax is deducted ‘Net’ p.a. – Interest rate AFTER tax is deducted

5. Annual Equivalent Rate AER AER of interest is given so that the interest rate on different savings accounts can be accurately compared AER removes – Effect of compounding interest (interest earned on interest already received) – Effect of promotional offers that may disappear after a few months Tricky concept!

6. MAIN TASK – Page 18 and 19 of the GCSE text book Quickly read through the information on interest rates and AER (in silence!) On lined paper, complete activities – 4 – 5 – 6 – SOME STUDENTS complete ACTIVITY 7

7. LEARNING OUTCOMES “You must/should now be able to...” ALL MUST: ALL MUST: – Define interest rates, AER and outline the difference between gross and net interest MOST MUST: MOST MUST: – Explain the principle of Annual Equivalent Rate and its impact on comparing savings accounts SOME SHOULD: SOME SHOULD: – Begin to evaluate the rewards and risks of different savings accounts.

8. HOMEWORK You will need to borrow the text book for this week’s homework (pages 17-19) Read through these pages and complete the worksheet issued to you