How is a savings account most useful?

• A. To obtain loans for large purchases
• B. To make frequent purchases and payments
• C. To invest in stocks and bonds directly
• D. To safely store money while earning interest

Answer: (D)

Verified step by step guidance

1. Understand the purpose of a savings account: A savings account is primarily designed to safely store money while earning interest over time. It is not intended for frequent transactions or direct investments in stocks and bonds.
2. Compare the options provided: Evaluate each option to determine which aligns with the primary function of a savings account. For example, obtaining loans for large purchases is typically associated with credit accounts, not savings accounts.
3. Analyze the incorrect options: Making frequent purchases and payments is a feature of checking accounts, not savings accounts. Similarly, investing in stocks and bonds directly requires brokerage accounts, not savings accounts.
4. Focus on the correct option: Savings accounts are most useful for safely storing money while earning interest, which helps grow your funds over time without significant risk.
5. Conclude the reasoning: Based on the analysis, the correct answer is 'To safely store money while earning interest,' as this aligns with the primary function of a savings account.