F1.4 Explain the concept of interest rates, and identify types of interest rates and fees associated with different accounts and loans offered by various banks and other financial institutions.
Activity 1: Five Questions
Josiane wants to open a bank account, but doesn't know if a savings or chequing account would best suit her needs.
- What five questions could a financial advisor ask to determine the type of bank account that is needed?
- What answers would you offer for each of the questions asked? Explain your reasoning.
- What criteria would Josiane use to select a type of bank account? Would this differ for another person? Why?
Activity 2: Financing Options for a Car
Ahmed wants to buy a car, but does not have the full amount of money to pay for it. What are three financing options available to Ahmed? Which of the options is the most financially advantageous? Show your mathematical reasoning.
Possible Questions
- How do you determine which financing option is most advantageous? Is it the option that will cost the least, or the option that will allow the most financial flexibility? Will this answer be the same for each individual?
- What do you need to know about Ahmed's financial situation to answer this question? What questions do you have?
- Would these same options be available for buying property, such as a house? Buying a computer? Explain how these purchases are different from buying a car.