Savings Account

Front

What is a savings account?

Back

A savings account is a deposit account held at a financial institution that provides a modest interest rate. It is designed for saving money rather than for daily transactions.

Front

What is the main advantage of a money market account over a regular savings account?

Back

Higher interest rates.

Front

Can you write checks from a savings account?

Back

No.

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What is a Certificate of Deposit (CD)?

Back

A CD is a time deposit account that requires you to leave your money for a fixed period of time in exchange for a higher interest rate.

Front

What does APY stand for?

Back

Annual Percentage Yield, which reflects the total amount of interest earned on an account based on the interest rate and the frequency of compounding.

Front

What is the primary purpose of a checking account?

Back

A checking account is primarily used for everyday transactions, allowing for deposits and withdrawals.

Front

What is compound interest?

Back

Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any interest that has already been added.

Front

What is the typical interest rate range for savings accounts?

Back

Typically, savings account interest rates range from 0.01% to 0.50%, depending on the financial institution.

Front

What is liquidity in terms of savings accounts?

Back

Liquidity refers to how easily and quickly you can access your money in a savings account without penalties.