Banking and Checking Accounts Unit
Unit Objectives:
~ To compute and compare earnings from simple and compound interest.
~ Calculating Interest Study Guide and Quiz
~ Introduction to Savings Accounts
~ Understand Checking Accounts
- Types of Accounts
- How to write checks
- Filling in a registry
~ Checking Account Study Guide and Quiz
~ Checking Account Scavenger Hunt
Key Terms:
~ Simple Interest:
~ Compound Interest:
~ Rate:
~ Savings Account:
~ Checking Account:
Calculating Simple Interest
*** The fees on some loans are computed by Simple Interest.***
RULE: I = PRT
Example 1: Rich lends $400 to his cousin, who pays him a 7% simple
interest each year. At the end of 3 years, the cousin pays back the loan.
What is the total amount Rich collects?
Step 1: Find the interest using I = PRT
Step 2: Add the interest to the principal amount to find the total.
Example 2: Find the simple interest earned and the total amount.
Principal: $300
Rate: 5%
Simple Interest : ______________
Time: 2 years
Total = _______________
*** Complete pg 248 Exercise A, #2 – 10 EVEN!!
Calculating Compound Interest
People earn can earn compound interest for the money in their savings accounts
We are still using I = PRT to calculate interest.
Example 3: Kim deposits $100 into an account that earns 5% interest,
compounded twice a year. Calculate the amount in the account after one
year.
Step 1: Compute the interest for the first 6 months.
Step 2: Add the interest to the original deposit (or principal) to find the
new principal.
Step 3: Compute the interest for the second 6 months.
Step 4: Add interest to the principal (from step 2) to find the new
principal.
(Interest compounded twice a year is said to be compounded semi annually)
*** Let’s complete pg. 251 Exercise A
Example 4: Compute the new principal at the end of one year when the
interest is compounded quarterly.
Principal: $100
First Quarter
Third Quarter
Rate of Interested: 5.5%
Second Quarter
Fourth Quarter
New Principal at the end of 1 year:
*** Let’s finish Exercise B on pg. 251
Introduction to Savings Accounts
What is a savings account?
What are the benefits of having a savings account?
It's Safe:
It Pays:
Types of Savings Accounts
There are many ways for you to save your money and earn interest. These are some of the
most common accounts at banks and credit unions. After you have saved enough money,
you may choose to invest with other types of financial services.
Basic Savings Account
Money Market Accounts
Certificate of Deposit (CD)
Savings Bonds
Types of Checking Accounts
Having a checking account at a bank or other financial institution
allows you to write checks to pay for goods and services or to get cash.
A check is a written order instructing your bank to pay money to
someone or an entity.
To use checks, you need to open a checking account and make regular
deposits into that account. Banks offer several different types of
checking accounts. Here are some of the most common checking
options:
• A basic checking
• An interest bearing
 A joint checking
What are the benefits of having a checking account?
Checks
How to Read a Check
This information will be printed on your checks.
1.
2.
Your Name
Your Address
City, State, Zip Code
1001
Date _____________
Pay to the order of ______________________________________ $ __________________________
_____________________________________________________________________________ dollars
Bank’s Name
Address
City, State, Zip Code
For ____________________________________
01234567
3.
____________________________________
000000281609 1001
4.
5.
6.
1.
2.
3.
4.
5.
6.
How to Write a Check
This is the information you write on a check.
Your Name
Your Address
City, State, Zip
1001
16-123/4567
Date ______1_____
Pay to the order of _____2_____________________________________
$ __3______________
4__________________________________________________________________________ dollars
Bank’s Name
Address
City, State, Zip
For _5___________________________________
1234567
6__________________________________
0000000016093829387 1001
What to Write
1.
2.
3.
4.
5.
6.
Filling in a Registry
Keeping Track of Your Checks
Your bank will give you a check register with your checks.
Use the register to keep track of the checks you write.
Example
Use it to keep track of the deposits you make.
Use it to keep track of how much money is in your account.
Debits:
( - )
When you write a check, record it in your check register.
Write the amount under the payment, or debit, column.
Subtract this amount from your balance.
If you pay a fee per check, remember to subtract that, too.
Credits:
( + )
When you make a deposit, record it in your check register.
Write the amount under the deposit, or credit, column.
Add this amount to your balance.
Check Register
Check
No.
3308
Date
6/10/06
6/12/06
3309
6/15/06
6/17/06
3310
6/17/06
Description of Transaction
Northern Electrics
May electric bill
Deposit
birthday money 
Anne’s Shoe Shop
shoes for Jennifer
ATM withdrawal
lunch with Judy
ReLini’s Salon
hair color
Payment
(Debit)
83.46
Deposit
(Credit)
Fee
.25
.25
20.00
1.00
29.00
.25
577.80
83.71
494.09
+ 100.00
594.09
- 30.05
564.04
- 21.00
543.04
- 29.25
513.79
-
100.00
29.80
Balance
Your Turn to Practice
Write in these transactions on the check register. You pay 25¢ for each check.
1. On June 20 you make a deposit of $324.00.
2. On June 21 you write a check to The Gas Company for $34.02.
3. On June 28 you buy a video from Sam’s Videos for $20.43.
What is your balance now? __________________________
*The following account begins with a balance of $297.15. Find the new
balance after each transaction.
Reading a Bank Statement
2D Student Handout - Reading a Bank Statement
Topic 2: Money Management
Name of Student ________________________
Reading a Bank Statement answer key
Using the bank statement on the next page, answer the following questions:
1. What period does this statement cover?
12/20/99 - 1/18/00
2. What is the account number of this statement?
0471-678
3. How many deposits were made and what were the amounts?
Three, for the amounts of $1200, $521.78, and $258.90
4. How many checks cleared and what was the total dollar amount of the checks that cleared?
Six, for a total amount of $1590.25
5. Was there any ATM activity? If so, how many transactions were there, and what was the
total amount?
Yes—three for a total amount of $80.00
6. Was there any check card activity? If so, how many transactions were there, and what was
the total amount?
Yes—one for a total amount of $35.00
7. Were there any service charges? If so, what was the total amount?
Yes—$3.50
8. What is the total of all withdrawals (checks, ATM transactions, check card transactions,
service charges)?
$1708.75
9. What is the new balance of the account?
$883.97
10. Did check #182 clear?
Yes
11. What was the amount of check #183?
$217.54
12. Did check #185 clear?
No
13. What was the amount of check #187?
$53.97
Reconciling an Account
Reconciling an Account (continued)
Enter
The New Balance shown
on your statement
$ ________
Add
Any deposits or transfers listed $ ________
in your register that are not
$ ________
shown on your statement
$ ________
Total
+ $ ________
Calculate the subtotal
$ ________
Subtract
Your total outstanding
checks and withdrawals
- $ ________
Calculate the ending balance
This amount should be the
same as the current balance
in your check register
$ _______
Use the reconciliation worksheet
above to answer the following
questions:
1. What is the new balance shown on the
statement?
2. What is the total amount of deposits listed in
the check register but not shown on the
statement?
3. What is the sum of the new balance and the
deposits not shown on the statement?
4. What is the total amount of outstanding
checks and withdrawals?
5. What is the ending balance?
Name:
Block:
Date: