Concept of the Month: Interested in Interest?

Saving your money with compound interest is just like planting seeds and watching them grow! Interest is free money the bank gives you for having your money in the bank. Compound interest is free money the bank gives you in addition to the money they already added quarterly (every 3 months). 

• Regular Interest: Simple interest is based on the principal amount of a loan or deposit. 
• Compound Interest: Based on principal amount and also on the accumulated interest of previous periods. 

Here are some examples of how you can earn interest through Young Americans Bank: 

• Savings Account Interest Rate: 0.10%
• Certificate of Deposit (CD) Interest Rates:
  • 0.35% – 6 months
  • 0.70% – 1 year
  • 0.80% – 2 years

Now it’s your turn!  See how your money can grow at Young Americans Bank:

• If you have a savings account with $300.00 in it and you are earning 0.10% interest, how much will you earn in a year?  What will your new balance be? 
• If you have a 6-month CD with $300.00 in it and you are earning 0.35% interest, how much will you earn in at the end of 6 months?  What will your new balance be?
• If you have a 1-year CD with $300.00 in it and you are earning 0.70% interest, how much will you earn in a year?  What will your new balance be?
• If you have a 2-year CD with $300.00 in it and you are earning 0.80% interest, how much will you earn in two years?  What will your new balance be?

Check your work with this answer key!