What is a savings account?

• A. A bank account designed to hold money and earn interest over time.
• B. An account you use only for spending.
• C. A loan you give to the bank.
• D. A safety deposit box.

Answer: (A)

A savings account is a bank account you use to set aside money with the goal of growing it over time. The bank pays you interest, which is a small percentage added to your balance for keeping money there. This is different from a checking account, which is meant for everyday spending. It’s also not a loan you give to the bank, and it isn’t a safety deposit box for storing valuables. Savings accounts help your money grow gradually, especially when interest compounds over time. Some accounts may have minimum balances or withdrawal limits, but the main idea is to keep money in the account to earn interest.