Saving Accounts

Savings Accounts

How is a Savings Account different from a Checking Account?

Learning Objectives

​Students will be able to:

• Explain the difference between a checking and savings account

• Compare different savings vehicles such as a savings account, CD, and money market account

• Identify important criteria to consider when selecting a savings account

Analyze the image on the worksheet to answer the questions on this Data Crunch

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What is the U.S. Savings Rate?

Multiple Choice

Before March 2020, when was the personal savings rate the HIGHEST?

• December 2018

• September 2016

• June 2015

• June 2019

• July 2020

Multiple Choice

Before March 2020, What was the peak savings rate?

• 4.9%

• 7.2%

• 8.5%

• 9%

• 26.1%

Open Ended

How would you describe the overall savings trend in the U.S. from June 2015 to February 2020?

Multiple Choice

Why did the savings rate increase after February 2020?

• The decrease in the price of gold.

• Because of the 2019 Presidential Election

• Economic uncertainty caused by the pandemic

• Due to the war Afghanistan

• A wheat shortage in the Midwest U.S caused by a drought.

Multiple Choice

What do you think accounts for the spikes in the personal savings rate in March 2020 and January 2021?

• Increases in unemployment during those months

• Government stimulus payments related to Covid-19

• New Year's and Easter Holiday

• The Superbowl and March Madness

• The Christmas shopping season.

Multiple Choice

The savings rate increased every year at some point between December and February. What could explain this.

• Santa Clause stuffs stockings with cash

• Everyone breaks up with their BF's and GF's before Christmas until after Valentine's Day

• Many make New Year's Resolution's to save more money

• Black Friday Sales save everyone money.

• People purchase new cars with great interest rates.

Checking or Savings? Both!

​What's the difference?

You may be tempted to think you’re all set once you have a checking account, but it’s important to have a savings account, too. Why do you need both? Watch this video about the differences between checking and savings accounts. Then, answer the questions.

Open Ended

According to the previous video, what are the main differences between a checking and savings account?

Compound Interest

​The Eighth Wonder of the World

Albert Einstein once called compound interest the eighth wonder of the world!  It’s a powerful tool for helping your savings account grow. What is compound interest? How can you use it to increase your savings? Watch the video. Then, answer the questions.

Open Ended

Based on the video, how does the age that a person starts saving impact the amount they can earn in compound interest?

Open Ended

Ben is comparing savings accounts at different banks and finds that most are offering an interest rate of about 1%. How does this low interest rate impact the power of compounding?

Tips on Opening a Savings Account

What's account is right for you?

Now that we  know about the difference between checking accounts and savings accounts and why savings accounts are useful, it’s time to pick one! Read the article on the next slide about selecting a checking account. Then, answer the questions.

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Open Ended

What saving account features does the article recommend inquiring about?

Open Ended

According to the article, what account fees should you avoid with savings accounts and why should they be avoided?

Open Ended

According to the video, what is a CD and how does it work?

Open Ended

What is a Money Market Account and how is it different from a traditional savings account and a Certificate of Deposit (CD)?

Open Ended

According to the video, what are some of the pros and cons of a money market account?

Multiple Choice

Which of the following is typically a feature of a savings account but not a checking account?

• Ability to withdraw money from an ATM

• FDIC insured up to $250,000

• Your money earns interest

• Ease of making payments using a debit card

Multiple Choice

Tyreke has $5,000 to put into an account that earns compound interest. Which of the following is the BEST advice you can offer so that he can maximize interest.

• It's ok to open an account with a low interest rates as long as you deposit your money early.

• Deposit your money as early as possible in an account with the highest interest rate possible.

• Wait for interest rates to rise above 5%, otherwise compounding doesn't have any effect.

• Compound interest will not have any effect at such a low dollar amount. Find different opportunities to earn interest on your savings.

Multiple Choice

Which is TRUE when comparing savings accounts and Certificates of Deposit?

• Savings accounts are FDIC insured while certificates of deposit are not.

• Savings accounts allow you to access your money at all times while certificates of deposit require your money to be left alone for a set period of time.

• Savings accounts typically have a higher interest rate than certificates of deposit

• Both savings accounts and certificates of deposit allow you to deposit money at any time.

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