Savings Accounts Test

Front

What is a savings account?

Back

A savings account is a bank account that allows you to deposit and withdraw money while earning interest on the balance.

Front

What is the purpose of an emergency fund?

Back

An emergency fund is used to cover unexpected expenses such as medical bills, car repairs, or urgent home projects.

Front

How can automatic deposits help in saving money?

Back

Automatically depositing money into a restricted account each month helps individuals save consistently without the temptation to spend.

Front

What is simple interest?

Back

Simple interest is calculated on the principal amount of a loan or deposit, typically expressed as a percentage.

Front

How do you calculate simple interest?

Back

Simple interest can be calculated using the formula: Interest = Principal x Rate x Time.

Front

What is the formula for calculating interest earned on a savings account?

Back

The formula is: Interest = Principal x Interest Rate x Time (in years).

Front

What is the difference between a regular savings account and a high-yield savings account?

Back

A regular savings account typically offers lower interest rates compared to a high-yield savings account, which offers higher interest rates for the same level of access.

Front

Why is saving money considered important?

Back

Saving money is important for financial security, achieving financial goals, and preparing for emergencies.

Front

What are some common reasons people struggle to save money?

Back

Common reasons include immediate needs and wants, lack of budgeting, and insufficient income.

Front

What is the significance of interest rates in savings accounts?

Back

Interest rates determine how much money you earn on your savings; higher rates yield more interest over time.