Why might an individual choose to have multiple bank accounts of different varieties?

• A. To separate funds for different purposes, such as savings, daily expenses, and investments
• B. Because having multiple accounts increases the interest rate on all accounts
• C. Because banks require customers to open at least three accounts
• D. To avoid paying any banking fees altogether

Answer: (A)

Verified step by step guidance

1. Understand the purpose of having multiple bank accounts: Individuals often choose to have multiple accounts to organize their finances effectively. Each account can serve a specific purpose, such as savings, daily expenses, or investments.
2. Evaluate the options provided in the question: Analyze each answer choice to determine its validity. For example, consider whether having multiple accounts increases interest rates or if banks require customers to open a minimum number of accounts.
3. Focus on the most logical and practical reason: The correct answer is likely related to financial organization and planning, as separating funds for different purposes helps individuals manage their money efficiently.
4. Eliminate incorrect options: For example, the idea that banks require customers to open at least three accounts or that multiple accounts avoid fees altogether is not accurate.
5. Conclude with the correct reasoning: The most plausible explanation is that having multiple accounts allows individuals to separate funds for different purposes, such as savings, daily expenses, and investments, which aids in better financial management.