Understanding Interest and Savings

What is the primary reason banks add a small amount of money to your savings account?

• To encourage you to withdraw more

• To charge you for account maintenance

• To penalize you for not spending

• To thank you for choosing their bank

If you save $100 in a bank account with 5% interest for a year, how much will you have at the end of the year?

• $105

• $110

• $100

• $115

What does the percentage of interest represent in terms of your savings?

• The amount you owe the bank

• The portion of your savings the bank keeps

• The extra money added to your savings

• The fee for opening an account

How does compound interest affect your savings over time?

• It has no effect on your savings

• It decreases your savings

• It keeps your savings the same

• It increases your savings significantly

Why is it important to understand the interest rate changes in your bank account?

• To decide when to withdraw all your money

• To calculate how much interest you are earning

• To determine the best time to switch banks

• To know when to close your account