What is a savings account?

• A. A loan account
• B. A bank account that earns interest on your deposited money and is intended for saving.
• C. A checking account used for daily transactions
• D. A credit card account

Answer: (B)

Saving accounts are bank accounts designed to set aside money for the future and earn interest on the balance. The main idea is to keep money in a safe place where it can grow a little over time, instead of spending it right away. When you deposit money, the bank may pay you interest—extra money added to your account—so your saved money increases, though the amount can vary. This type of account is specifically for saving and not for everyday spending. It’s different from a loan, which is money you borrow and must repay; it’s also different from a checking account, which is meant for regular transactions and paying bills; and it’s not a credit card account, which lets you borrow money up to a limit and pay it back later.