Savings Options

AssignmentGo to the 3 ring binder and find the savings

options organizer. Fill this organizer in as you view this

PowerPoint.

Savings AccountExamples: Passbook SavingsInterest:

Lower interest rate than other saving options

Interest rates sometimes higher when your balance is higher

Withdrawal RulesRegulation D: Make 6 withdrawals within a

statement cycleAdvantages

Safe, small opening deposit, earn interest

Certificate of Deposit (CD)CD: deposit that earns a fixed interest rate for

a fixed period of time.Interest:

Higher interest rates because the bank knows how long you will keep the $ on deposit…so they can offer you higher rates than a savings account.

Generally the longer the period of time you invest your money the higher your interest rate (or rate of return) will be.

Withdrawal Rules:Pay % of interest designated by the bank for early

withdrawal.

Certificate of DepositAdvantages

Higher interest rates than a passbook savings

DisadvantagesYour $ is locked up for a specific time periodIf interest rates on another option is higher

then you can’t take advantage of those higher rates without paying a penalty.

Money MarketCombination of a savings and a checking accountInterest:

Higher interest than regular savings but lower than CDs

Different rates for different balancesWithdrawal Rules:

Regulation D…but 3 of your withdrawals can be checks

Advantages:Higher interest rate than a passbook savingsUnlimited transfers electronically

Disadvantages:Amount of times you can withdraw your $

Government BondUS Government owes you the amount of

the bond plus interestInterest:

Call treasury department for redemption table or go to your local bank.

Withdrawal Rules:Can sell your bond at any time without

penalty; you just wouldn’t earn the full amount of interest until the bond matures

AdvantagesSafe way to invest your $

Annual Percentage Yield (APY)Interest the account will earn in 1 yearHelps compare rates at different banks