Which type of account typically earns interest over time?

• A. Checking account
• B. Credit account
• C. Savings account
• D. Expense account

Answer: (C)

A savings account typically earns interest over time because it is specifically designed for individuals to store their money while also allowing them to earn interest from the balance. Financial institutions pay interest on savings accounts as a way to entice customers to deposit their funds, essentially rewarding them for leaving their money with the bank.

In contrast, a checking account primarily serves as a transactional account used for everyday banking needs like deposits and withdrawals, and often earns little to no interest. A credit account, which allows users to borrow money, does not earn interest for the person borrowing; instead, it accrues interest on the amounts owed. An expense account is commonly used in business accounting to track expenditures and does not pertain to earning interest.

Thus, savings accounts are geared specifically toward earning interest, making them an effective tool for growing funds over time.