7B, 7C Nov 28, links for Interest calculations

 When money is deposited in a bank, the bank uses your money and invest or lend it to other customers so they can make a profit. The money that is earned from your saving or cheqing account is called “INTEREST”.

 

If the interest rate is 2.50%, how much interest will be earned if there is $1000 in your account, and the money is left there for the next 12 months (365 days)?

 

Step 1: Convert 2.50% into decimal

2.50 ¸ 100 = 0.025

 

Step 2: Use the money in your bank account and multiply by the interest rate in decimal

1000 ´ 0.025 = $25                 

 

That means if the money is not touched for a year, you will collect $25 as interest, or about $2.00 per month

 

Part A: Calculate the interest received from the following cases. Show all steps

 

Deposit	$500	$750	$1500
Annual Interest rate	2.75%	5.23%	0.15%
Interest earned after a year

 

Part B: use the following links and determine the interest rates of saving accounts from different banks, assuming you have $1000

https://www.td.com/ca/en/personal-banking/products/bank-accounts/account-rates/

https://www.bmo.com/main/personal/bank-accounts/savings/interest-rates/

https://www.rbcroyalbank.com/accounts/compare-savings-accounts.html

https://www.cibc.com/en/interest-rates/personal-bank-account-rates.html

https://www.tangerine.ca/en/rates/savings-account-rates

 

	TD Bank	Bank of Montreal	Royal Bank (RBC)	CIBC
Interest Rate in saving account When there is $1000
	Scotia Bank	National Bank	HSBC	Tagerine
Interest Rate in saving account When there is $1000

 

Part C: If you leave the money in the bank for a longer period of time and lock in the terms, say 180 days or a year, then the rates are usually higher. That means within that time period, the money cannot be withdrawn and transfer elsewhere. These are called GIC (Guaranteed Investment Certificates) 

 

https://www.bmo.com/main/personal/investments/gic/gic-rates/

https://www.td.com/ca/en/personal-banking/personal-investing/products/gic/special-offer/?tdtab=2&tdtarget=non-cashable

https://www.hsbc.ca/investments/products/term-deposits/term-deposit-canadian-dollar/

https://www.tangerine.ca/en/rates/gic-rates

https://www.scotiabank.com/ca/en/personal/rates-prices/gic-rates.html

 

Note that these are annual rates, and if the term is more than a year, the interest earned will be converted accordingly.

 

Example: Scotia bank 2 year GIC is at 5% annual rate. If you have $1000 there, by the end of the second year, the interest earned will be

 

Step 1 5% = 0.05                     Step 2: 1000 ´ 0.05 = $50 interest per year

Step 3: Two years will be $50 interest ´ 2 = $100 earned

 

Complete the table below and determine the best interest rate, term (duration) for each of the following banks. Some of the links are listed above on this page.

 

	TD	BMO	HSBC	Tangerine	Scotia Bank
Term (how many days or months or years)
Annual Interest Rate
If you have $1000, how much interest will be earned when the GIC matures? Show calculations