About this video
Lena saves $35 a month for 9 months and earns $1.25 in interest. The video multiplies 35 x 9 = 315 to find her deposits, adds the interest to get a balance of $316.25, and explains that banks pay interest because they can lend out the money you keep with them.
You'll be able to
- multiply to find the total amount saved over several months.
- add interest to deposits to find a savings account balance.
- explain in my own words what interest is and why banks pay it.
Key words
- savings account
- A bank account where you keep money you are saving.
- deposit
- Money you put into a bank account.
- interest
- Extra money a bank pays you for keeping your money with them.
- balance
- The total amount of money in an account.
Transcript
- [Instructor] We're told Lena puts $35 in her savings account each month for nine months. She earns a 41.25 total interest during that time. What is the balance in Lena's savings account after nine months? Pause this video, have a go at it. Okay, so first we just have to calculate how much she put in and then add the interest.
So the amount that she puts in is $35 per month times nine months. So if we take $35 times nine months, nine times five is 45, 9 times three is 27, plus four is 31. So that's how much she deposits, but she also got interest on that. So if we then add another $1.25 So then if we add all of this together, we're going to get $316.25 as our answer and we're done.
Now some of you might be saying, what is this interesting and why are banks paying it? Well, when you put money in your bank, they actually, well, they want you to put money in the bank because they can do things with that money. They can sometimes lend some of that money out to other people and when they lend it to other people, they make interest on that.
So they are essentially paying you to be able to lend your money out. So that's what interest is. It's the bank paying you to keep money with them that they can just use for other things. But that's why it's sometimes good to keep it with a bank because you're not just saving directly the money that you save, but you're actually earning extra money on it for someone to be able to keep it in the bank.
And it's oftentimes convenient and safe to keep it in the bank. Easy to keep track of.
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