—
A collaboration between CFY &
the Children's Aid Society's Economic
Empowerment Initiative.
For
information about the Economic Empowerment
Initiative, please contact CAS
Lesson
3
WHAT
YOU WILL LEARN IN THIS LESSON
1.
What
to think about when choosing a savings or checking account.
2.
The
differences between savings accounts and checking accounts.
Question:
Congratulations!
You got $100 for your birthday. Which of the
following places is the best place for you to
open your savings account?
Financial
Institution / Account
Interest
Rate
Minimum
Balance
Fees/Penalties
Q
& A Federal: Savings1
1.25%
$50
If
you go below the $50 minimum, you must pay $2 per month
for every month you are below the minimum.
Q
& A Federal: High Yield Savings
2.0%
$150
You
must keep at least $150 in this account for 6 months.
If you go below the minimum during this time, you pay
$5 per month.
People's
Credit Union: Basic Savings
1.25%
$1
One-time
membership fee of $15. Otherwise, no fees or penalties.
Rainbow
Bank : Basic CD
2.5%
$250
You
must keep your money in this account for 12 months. If
you withdraw before 1 year, you must pay a 10% penalty.
How
to figure this out….
1.
Let's assume that you only have those $100 that you got for
your birthday...
2.
This
means that you won't be able to meet the minimum balances of
the 2nd and 4th options. Both of them require a minimum balance
of more money than you have.
3.
This
leaves you with 2 choices: Option #1 and Option #3. The interst
rate for both of them is actually the same: 1.25%
4.
The
final deciding factor is whether or not you think you can
keep your money in the account without touching it. If you
think you'll need to take some money out (for Christmas presents
or other kinds of things), you might want to put your $100
in the Credit Union (Option #3) because they won't charge
you as long as you have at least $1 in your account.
On
the other hand, if you think you can keep at least $50 in
the account at all times, you probably want to put your money
into Option #1 because you won't have to pay a $15 membership
fee.
TIP
When
you're choosing a bank or credit union to open
your savings account or CD, be a good consumer.
ASK questions!!
1.
What is the interest rate for this account?
(The higher the interest rate, the better the
return.)
2. What is the minimum
balance for this account? (The lower,
the better.)
3.
Are there any penalties or fees if I go below
the minimum balance?
4. Are there any restrictions on withdrawals?
Can I take my money out whenever I want? (When
your money is availablefor your withdrawal
whenver you want, it is considered completely
liquid.)
5. Do you offer any special savings programs
for children or teens?
In
addition to keeping your money safe and making
your money grow, why else would you want to put
your money in a savings account?
Answer:
Having
a savings account is important because:
1.
It
allows you access to CREDIT
(like credit cards, LOANS,
and MORTGAGES)!!
Many financial institutions will not issue
you credit if you don't have some sort of
COLLATERAL,
for example, money in a savings account.
2.
The
money you save in your account is available
to pay your bills or for emergencies that
might come up.
So,
what is the difference between a savings account
and a checking account and why would someone
get a checking account instead of a savings
account?
Answer:
Savings
Account:
Checking
Account:
Owl
has told you about what questions to ask when you're
opening a savings account, what do you think you
need to ask before you open a checking account?
I
can see you being a very successful saver!!! Think
about opening a savings account in the next couple
months. When you choose where to save, remember
to ask about:
Money
Center 
Saving
Money
