1. Types of Savings Accounts Unit 2. Lesson 2.

2. Objectives Identify types of investing options offered by banks Compare and contrast the pros and cons of different types of accounts Conduct research on bank accounts available to you

3. Types of Savings Accounts Passbook Accounts Statement Accounts Checking Accounts Money-Market Accounts Certificates of Deposit

4. Passbook Accounts Depositor receives a booklet where deposits, withdrawals, and interest are recorded by the depositor. Average interest rate is lower at banks and savings and loans than at Credit Unions. Funds are easily accessible. Usually children’s accounts.

5. Statement Accounts Similar to a passbook account, except depositor receives monthly statements instead of a passbook. Accounts are usually accessible through 24- hour automated teller machines (ATMs). Interest rates are the same as passbook account. Funds are easily accessible, but may have limits

6. Checking Accounts Funds are easily accessible for daily transactions Customers can use a debit card or checks to make purchases or pay bills Depositor earns interest on any unused money in his/her account.

7. Money-Market Accounts Similar to checking/savings account, but… Interest rate varies with size of account balance and current market interest rates. Can access your money from an ATM, a teller, or by writing a limited number of checks a month.

8. Money-Market Accounts Benefits Immediate access to your money. (liquidity) Higher interest rates than regular savings accounts. Trade-offs Usually requires a minimum balance of $1,000 to $2,500. Limited number of checks can be written each month.

9. Certificate of Deposit | aka CDs Bank pays a fixed amount of interest for a fixed amount of money during a fixed amount of time. CDs often have higher interest rates than traditional savings accounts. Early withdrawals may have penalties.

10. Certificate of Deposit Benefits No risk Simple No fees Offers higher interest rates than savings accounts. Trade-offs Restricted access to money Withdrawal penalty if withdrawn before expiration date

11. Types of Certificates of Deposit Rising-rate CDs with higher rates at various intervals, such as every six months. Stock-indexed CDs with earnings based on the stock market. Callable CDs with higher rates and long-term maturities, as high as 10–15 years. However, the bank may “call” the account after a stipulated period, such as one or two years, if interest rates drop. Global CDs combine higher interest with a hedge on future changes in the dollar compared to other currencies. Promotional CDs attempt to attract savers with gifts or special rates.

12. Comparing Accounts Name of bank? Is there a student savings account? Is there a minimum balance required? Is a debit card included? What is the minimum age to start an account? What is the address of the closest branch to your house? Would you use this bank? Why?