Question

What's one difference between a checking account and a savings account?

A. A checking account has fewer fees
B. A savings account earns interest.
C. A checking account comes with a credit card.
D. A savings account comes with a debit card.

Answer 1

The main difference between a checking account and a savings account is that a savings account earns interest, whereas a checking account is primarily for daily transactions and may not earn interest.

Step-by-step explanation:

One key difference between a checking account and a savings account is that a savings account earns interest. This is distinct from a checking account, which is typically used for daily transactions and may pay little to no interest. Moreover, checking accounts often come with a debit card, facilitating easy access to funds for purchases, which are directly deducted from the account.

In contrast, savings accounts are designed to hold funds more for savings purposes rather than frequent transactions, and they typically offer some rate of interest on the balance held in the account.

While in the past, the functionalities of these two account types were clearly defined, nowadays the distinction has blurred, with some checking accounts offering interest if a certain minimum balance is maintained and some savings accounts offering limited check-writing capabilities.