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Questions and Answers
What is the primary purpose of a savings account?
In the context of bank deposits, what does the term 'liability' refer to?
What happens when someone opens a bank account and makes a cash deposit?
What distinguishes savings accounts from checking or current accounts?
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Which type of account usually pays an interest rate higher than others?
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What type of account usually charges a fee if the balance falls below a specified minimum?
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Which account type yields high interest but can only be withdrawn after the lapse of the agreed period or by giving notice to the bank?
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What type of account allows withdrawals through designated machines, even when banks are closed?
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Which account type is usually provided with a bank statement at the end of the month showing all the deposits made, checks paid by the bank, and the balance of the account?
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What type of savings account allows numerous withdrawals and unlimited deposits?
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Study Notes
Savings Account Purpose
- The primary purpose of a savings account is to provide a safe place for individuals to deposit money while earning interest on their balance.
Bank Deposits and Liabilities
- In banking, the term 'liability' refers to deposits held by the bank, representing money that must be returned to account holders upon request.
Bank Account Opening and Cash Deposit
- When a person opens a bank account and makes a cash deposit, this action increases the bank's liabilities and provides the account holder with immediate access to their funds.
Distinction of Savings Accounts
- Savings accounts differ from checking accounts as they typically offer higher interest rates and have limitations on the number of withdrawals.
Higher Interest Account
- Savings accounts generally pay higher interest rates compared to checking accounts, encouraging savings over frequent transactions.
Fees for Low Balances
- Checking accounts often charge fees if the balance falls below a specified minimum, promoting account maintenance.
Interest-Yielding Account with Restrictions
- Fixed-term deposit accounts offer high interest but restrict withdrawals until the end of the term or require prior notice.
Withdrawal Methods
- Automatic Teller Machine (ATM) accounts allow withdrawals through designated machines, making access convenient even when banks are closed.
Monthly Bank Statements
- Checking accounts usually provide a monthly bank statement that details all transactions, including deposits, cleared checks, and account balances.
Flexible Savings Account
- A high-yield savings account allows numerous withdrawals and unlimited deposits, promoting liquidity while still earning interest.
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Description
Test your knowledge about bank deposits and liabilities with this quiz. Learn about the types of deposit accounts and the rights of the account holder. Understand the concept of bank deposits as a liability owed by the bank to the depositor.
