Unit 3 - Banking: Savings Understanding Savings Accounts

Front

Definition of Savings Account

Back

A bank account that earns interest and is used to hold money not needed for daily expenses.

Front

Interest Rate

Back

Percentage paid by the bank on the savings account balance.

Front

Compound Interest

Back

Interest calculated on the initial principal and also on the accumulated interest.

Front

Simple Interest Formula

Back

I = P × r × t

Front

Minimum Balance Requirement

Back

The least amount of money required to keep the account open.

Front

FDIC Insurance

Back

Protects deposits up to $250,000 per depositor, per bank.

Front

Withdrawal Limitations

Back

Restrictions on the number of withdrawals per month.

Front

APY

Back

Annual Percentage Yield; reflects the total interest earned in a year.

Front

Liquidity

Back

Ease of converting savings to cash without loss.

Front

Online Savings Account

Back

Savings account managed via the internet, often with higher interest rates.