Which of the following best describes the main differences between checking and savings accounts?

• A. Savings accounts allow unlimited check writing, while checking accounts restrict withdrawals to six per month.
• B. Checking accounts are primarily used for frequent transactions and payments, while savings accounts are designed for earning interest on deposited funds with limited withdrawals.
• C. Checking accounts typically offer higher interest rates than savings accounts.
• D. Both checking and savings accounts are only accessible through ATMs and do not allow electronic transfers.

Answer: (B)

Verified step by step guidance

1. Understand the purpose of checking and savings accounts: Checking accounts are designed for frequent transactions, such as paying bills or making purchases, while savings accounts are intended for storing money and earning interest over time.
2. Identify the key features of checking accounts: These accounts typically allow unlimited transactions, including check writing, debit card use, and electronic transfers, but they usually offer little to no interest on the balance.
3. Identify the key features of savings accounts: Savings accounts are designed to earn interest on deposited funds and often have restrictions on the number of withdrawals or transfers per month, typically limited to six under federal regulations.
4. Compare interest rates: Savings accounts generally offer higher interest rates than checking accounts, as their primary purpose is to help individuals grow their savings over time.
5. Clarify accessibility: Both checking and savings accounts can be accessed through ATMs, online banking, and electronic transfers, but their usage differs based on the account's purpose and features.