Final answer:
The savings account established for large purchases over time is a special savings account. Unlike certificates of deposit, which have penalties for early withdrawal, special savings accounts offer flexibility and are suited for saving towards a particular goal.
Step-by-step explanation:
The savings account described is typically referred to as a special savings account, which is specifically designed for setting aside funds for large purchases over time. This type of account is used by individuals who have a specific savings goal in mind, such as a down payment on a home, a car purchase, or a significant life event. It allows for the accumulation of funds in a designated space, separate from the day-to-day transactions that might occur in a checking account.
A Certificate of Deposit (CD) is another savings mechanism offered by financial institutions, where an individual deposits a certain amount of money for a fixed period. In return, the bank provides a higher interest rate compared to regular savings accounts. However, early withdrawal of funds from a CD comes with a substantial penalty, which is an important consideration if you need flexible access to your savings. Unlike a CD, a special savings account typically does not lock in the funds for a fixed term, which makes it more suitable for individuals planning to make a large purchase and needing more accessibility to their savings.
A money market account is another type of savings account that typically offers higher interest rates than a regular savings account and comes with check-writing privileges. However, it may require a higher minimum balance and could have limits on the number of transactions per month. As for checking accounts, they are designed for frequent transactions and everyday use, usually offering little to no interest.
As per the options provided, the correct choice for a savings account established for large purchases, allowing individuals to save in advance over time, is option d) Special savings account. This is the most appropriate tool for such financial goals due to its ability to accrue savings without the restrictive terms of products like CDs.