Question

Question 5 of 10

What is the name of a savings account that offers higher interest rates, but in
which a person's money must stay deposited for a specific amount of time?
A. Money market account
B. Savings account
C. CD

Answer 1

C. CD

Explanation:

You want the type of savings vehicle that offers the highest interest rate, possibly with a requirement the deposit be for a specific period.

Interest rates

As of today, my local savings institution offers these choices:

• Savings account, no minimum balance, at 0.50% APY
• 12–17 month CD, $500 minimum, at 3.04% APY. Rates are lower for longer terms.
• Money Market, $10000 minimum, at 2.02% APY.

The highest interest rate is for a CD, choice C, which requires the money stay deposited for a specific time.

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Additional comment

This institution also offers an interest rate of 0.10% on checking account deposits, with no monthly fees. Rates vary with the institution and over time. You will likely find different rates and/or charges if you explore the marketplace.

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