Final answer:
The correct answer is: account-holders are limited to limited withdrawals a month per federal law. Certificates of deposit (CDs) are not as liquid as savings accounts due to early withdrawal penalties. Bank accounts are protected by the FDIC, ensuring the safety of deposits up to $250,000.
Step-by-step explanation:
According to federal law, account-holders are limited to six withdrawals a month from a savings account. Certificates of deposit (CDs) are not as liquid as savings accounts because account-holders are required to keep the money deposited for a certain period; otherwise, they must pay a fee. Therefore, the correct answer to the fill-in-the-blank question is: account-holders are limited to limited withdrawals a month per federal law. Certificates of deposit are not as liquid as savings accounts because account-holders are required to keep the money deposited for a certain period; otherwise, they must pay a fee.
When you open a CD, you agree to deposit money for a set period, ranging from a few months to several years. In return, the bank pays a higher interest rate than for regular savings accounts. Withdrawing funds from a CD before the end of the term incurs a substantial penalty for early withdrawal, as highlighted in the advertisements for CDs. Unlike a checking account that typically allows for unlimited transactions without fees, a savings account and CDs have certain limitations and conditions for accessing the funds.
The safety and security of bank accounts, including savings accounts and CDs, are part of their appeal. This safety is amplified by the FDIC, which ensures deposits up to $250,000 per depositor, per insured bank, for each account ownership category. Despite being less liquid, money in a savings account or CD provides a safer and often more profitable alternative to keeping cash at home due to the interest accumulated over time.