2-3 Saving Accounts

savings account

a bank account that earns interest

interest rate

proportion of the balance that will be paid by the bank

principal

The amount of money borrowed

Annual Percentage Rate (APR)

the yearly interest rate that is paid by the bank, expressed as a percent

simple interest

interest based only on the original principal

Simple Interest Formula

I=PRT (Interest = Principal x Rate x Time)

statement savings account

account similar to a passbook savings account except that the depositor receives a monthly statement showing all transactions

Minimum Balance

A specific amount of money that a bank or credit union requires in order to open or maintain a particular account.

Money Market Account (MMA)

a type of savings account that requires a higher minimum balance than a regular savings account, but offers a higher interest rate

Certificate of Deposit (CD)

A savings alternative in which money is left on deposit for a stated period of time to earn a specific rate of return.

maturity

period of time at the end of which time deposits will pay a stated rate of interest

arithmetic sequence

a sequence in which each term is found by adding the same number to the previous term

common difference

the difference between consecutive terms of an arithmetic sequence

finite

having limits; lasting for a limited time

infinite

without beginning or end