The idea, step by step
Follow the statement
An opening balance changes through deposits, withdrawals, interest and fees. Interest and deposits are credits; fees and withdrawals are debits. The statement check is opening balance plus credits minus debits equals closing balance.
Interest timing matters. A deposit made late in a period may not earn the same interest as money present throughout it. Use the timing rule supplied; do not silently assume a daily or monthly method.
| Entry | Credit (AUD) | Debit (AUD) |
|---|---|---|
| Opening balance | 900.00 | |
| Deposit | 120.00 | |
| Withdrawal | 75.00 | |
| Interest | 2.00 | |
| Fee | 4.00 | |
| Closing balance | 943.00 |
Compare net earnings
Compare accounts with the same starting balance and time period. Calculate interest and fees separately, then subtract the fees. A higher quoted rate can produce a lower final amount.
A fixed monthly fee can be large relative to a small account balance. Our examples use simplified, hypothetical account rules so the mathematical effect of each charge can be isolated.
A common trap
The highest interest rate always produces the largest balance.
Instead: Fees and eligibility conditions also affect the net result.
See the thinking
Worked example
An account opens at AUD 900. It receives AUD 120 and AUD 2 interest, then has a AUD 75 withdrawal and AUD 4 fee. Find the closing balance.
- Credits=122;debits=79.
- 900+122−79=943.
Worked example
For one year, A pays 4% simple interest without fees. B pays 5% simple interest but charges AUD 3 monthly. Compare a AUD 2000 deposit.
- A=2000+80=2080.
- B=2000+100−36=2064.
- Difference=16.
Check your understanding
Interest is AUD 1.50 and the monthly fee AUD 2. What is the net change?
Show answer
AUD 0.50 decrease
1.50−2=−0.50.
Your turn
6 questions · 12 marks · Work at your own pace.
Read the questions online
- Opening AUD 650, deposit AUD 80, withdrawal AUD 135. Find closing balance.2 marks
- Find 9 months of AUD 2.50 monthly fees.2 marks
- Opening AUD 420, deposit AUD 150, fee AUD 3, closing AUD 537. Find the withdrawal.2 marks
- AUD 1200 earns 3% simple interest for a year; annual fees are AUD 18. Find net earnings and final balance.2 marks
- Compare AUD 900 at 2% simple interest/no fee with 4% simple interest/AUD 24 yearly fee.2 marks
- Why must a model state when deposits are made?2 marks
Read the worked solutions
Equivalent correct methods earn the corresponding marks. Include units where asked.
- Opening AUD 650, deposit AUD 80, withdrawal AUD 135. Find closing balance.2 marks
650+80−135=595.
AUD 595.00 - Find 9 months of AUD 2.50 monthly fees.2 marks
9×2.50=22.50.
AUD 22.50 - Opening AUD 420, deposit AUD 150, fee AUD 3, closing AUD 537. Find the withdrawal.2 marks
420+150−3−W=537.
W=30.
AUD 30.00 - AUD 1200 earns 3% simple interest for a year; annual fees are AUD 18. Find net earnings and final balance.2 marks
Interest=36.
36−18=18.
AUD 18 net; AUD 1218 final - Compare AUD 900 at 2% simple interest/no fee with 4% simple interest/AUD 24 yearly fee.2 marks
900×1.02=918.
900×1.04−24=912.
First: AUD 918; second: AUD 912. First is higher. - Why must a model state when deposits are made?2 marks
The time for which each deposit is invested affects its growth.
Different deposit dates can earn different amounts of interest.
Curriculum reference & lesson scope
SACE Board of South Australia
Stage 1 General Mathematics: investing and borrowing. Supplied educational models cover interest, investment comparisons, shares and credit; they are not recommendations of real products or statements of personal tax liability.
Official curriculum source ↗