Week #4 Ch. 1 & 2 Savings & Checking

Chapter 1: Savings Accounts

  1. Do you have a savings account? Why is it important to have one?
  2. Define and explain compound interest.
  3. You have $65 in your savings account at the beginning of a month.  The bank pays you 2.75% interest on this account each year; interest payments are made each month. Assuming you make no deposits or withdrawals over the next month, how much interest will you earn during the month?
  4. You are given the opportunity to put your money in one of two savings account. Account 1 compounds interest monthly at a rate of 0.4%. Account 2 compounds every year at a rate of 4.8%. Which account would you choose and why?
  5. You have $500 in a savings account. How long will it take to double that amount at the following interest rates 1.5% and 4.5%? (Assume interest is paid annually, and use the Rule of 72.)
Chapter 2: Checking Accounts
  1. Do you have a checking account? What do you use a checking account for?
  2. In the book Page 12 "Try It" Examples and Practice at the bottom of the page. Read the scenario and answer the question: Using the formula, what will your account balance be at the end of September?
  3. In the book Page 14 "Try It" Examples and Practice at the top of the page. Read the scenario and answer the questions.....What is the current balance in your bank account? What will happen if the cell phone company tries to cash your check? What will happen if you fail to record the debit?
  4. How do you protect yourself from Identity Theft? See page 15 in the reading.
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