Financial Literacy: Banking: Checking and Savings Accounts
Compare account types, fees, deposits, withdrawals, and interest
Financial Literacy: Banking: Checking and Savings Accounts
Compare account types, fees, deposits, withdrawals, and interest
Financial Literacy - Grade 6-8
- 1
Maya earns $25 for babysitting. She wants to spend $8 this weekend and save the rest for a new bike. Which account would be better for the money she does not plan to spend soon, a checking account or a savings account? Explain your choice.
Think about which account is best for money you want to keep rather than spend right away.
A savings account would be better for the money Maya does not plan to spend soon because it is meant for storing money and may earn interest over time. - 2
A checking account is often used for everyday spending. List two ways someone might use money from a checking account.
Someone might use a checking account to pay a phone bill and buy groceries with a debit card. Checking accounts are useful for regular payments and purchases. - 3
Look at this account activity: starting balance $120, deposit $40, debit card purchase $18, ATM withdrawal $25. What is the ending balance?
Deposits add money to the account, and purchases or withdrawals subtract money from the account.
The ending balance is $117. The calculation is $120 + $40 - $18 - $25 = $117. - 4
Jordan has $200 in savings. The bank pays $4 in interest at the end of the year. What is Jordan's new savings balance?
Jordan's new savings balance is $204 because $200 + $4 = $204. - 5
A bank charges a $5 monthly fee for a checking account unless the account holder keeps at least $100 in the account. Luis has $92 in his checking account at the end of the month. Will he be charged the fee? Explain.
Compare Luis's balance to the minimum balance requirement.
Yes, Luis will be charged the $5 fee because his balance is below the required $100 minimum. - 6
Sofia has a savings account balance of $350. She deposits $30 each month for 4 months. If there are no withdrawals and no interest is added, what will her balance be after 4 months?
Sofia's balance will be $470. She deposits $30 for 4 months, which is $120, and $350 + $120 = $470. - 7
Explain the difference between a deposit and a withdrawal.
Think about whether the account balance goes up or down.
A deposit adds money to an account. A withdrawal takes money out of an account. - 8
A debit card purchase is made from a checking account. If the account has $60 and the purchase is $72, what problem could happen if the bank allows the purchase to go through?
The account could become overdrawn because the purchase is more than the available balance. The bank might also charge an overdraft fee. - 9
Use the account register: Balance $85.00, deposit $20.00, check written for $32.50, debit card purchase $14.75. What is the final balance?
Line up the decimals carefully when adding and subtracting money.
The final balance is $57.75. The calculation is $85.00 + $20.00 - $32.50 - $14.75 = $57.75. - 10
Which account is usually better for paying rent, buying lunch, and making frequent purchases, a checking account or a savings account? Explain why.
A checking account is usually better for paying rent, buying lunch, and making frequent purchases because it is designed for everyday spending and payments. - 11
Which account is usually better for building an emergency fund, a checking account or a savings account? Explain why.
An emergency fund is money set aside for future unexpected needs.
A savings account is usually better for building an emergency fund because it helps keep the money separate from everyday spending and may earn interest. - 12
A savings account pays 2% simple interest per year. If Ava has $500 in the account for one year, how much interest will she earn?
Change 2% to the decimal 0.02, then multiply by the balance.
Ava will earn $10 in interest. Two percent of $500 is 0.02 x 500 = 10. - 13
Read the two account options. Account A has no monthly fee but requires online statements. Account B has a $6 monthly fee and paper statements. If Malik is comfortable using online statements, which account costs less over one year? How much less?
Account A costs less over one year. Account B costs $72 per year because $6 x 12 = $72, so Account A costs $72 less. - 14
Nina wants to open a bank account. Give two questions she should ask before choosing a checking or savings account.
Good questions help you find the cost and benefits of an account.
Nina should ask whether the account has monthly fees and whether it has a minimum balance requirement. She could also ask about interest rates, ATM fees, and online banking features. - 15
A student has $150. They put $50 in checking for school supplies and snacks, and the rest in savings for a summer camp goal. How much goes into savings, and why is this a smart plan?
The student puts $100 into savings because $150 - $50 = $100. This is a smart plan because the checking money is available for short-term spending while the savings money is set aside for a future goal.