Future Business Leaders of America (FBLA) Personal Finance Practice Test

Which type of financial account typically yields interest on deposits?

1. Checking account

2. Investment account

3. Savings account

4. Credit account

The correct answer is: Savings account

A savings account typically yields interest on deposits because it is specifically designed to encourage saving. When funds are deposited into a savings account, they earn interest, which is a percentage of the account balance paid by the bank as a return for allowing the bank to use that money for lending and other activities. Savings accounts generally offer a higher interest rate compared to checking accounts, as they are intended for funds that are not intended for frequent withdrawals. In contrast, checking accounts usually provide easy access to funds for daily transactions and generally do not accrue significant interest. Investment accounts are used for trading stocks, bonds, mutual funds, and other securities with the potential for higher returns but also come with greater risk. Credit accounts, such as credit cards, allow borrowing but do not yield interest on deposits; instead, they typically charge interest on any borrowed funds. Thus, the nature of a savings account makes it the correct choice for yielding interest on deposits.