Which of the following statements about savings accounts is FALSE? Savings accounts may
The Correct Answer and Explanation is:
Sure! Let’s start by identifying a false statement about savings accounts from the following options (assumed from a typical multiple-choice context):
Which of the following statements about savings accounts is FALSE?
A. Savings accounts typically earn interest over time.
B. You can write unlimited checks from a savings account.
C. Savings accounts are offered by banks and credit unions.
D. Savings accounts are a safe place to keep money.
Correct Answer: B. You can write unlimited checks from a savings account.
Explanation
Savings accounts are designed to help individuals save money over time while earning interest. Most banks and credit unions offer these accounts with the goal of providing a safe, low-risk option for storing money that is not needed for daily expenses. The main features of savings accounts include interest earnings, low risk, and high liquidity.
Option A is true: Savings accounts typically earn interest, although the rates are generally lower compared to other investment products. This interest helps your money grow over time, making savings accounts a useful tool for long-term financial planning.
Option C is also true: Both banks and credit unions offer savings accounts. While there might be slight differences in interest rates and fees, the core function of a savings account remains the same across institutions.
Option D is true as well: Savings accounts are one of the safest places to store your money. In the U.S., accounts are usually insured up to $250,000 by the FDIC (for banks) or the NCUA (for credit unions), which protects your money in case the institution fails.
However, Option B is false. You cannot write unlimited checks from a savings account. In fact, savings accounts are not designed for frequent transactions. Regulations like the former Federal Reserve Regulation D (which limited certain withdrawals to six per month) restricted how often money could be moved out of a savings account. While that rule has been relaxed, most banks still limit withdrawals and transfers to encourage saving behavior and distinguish savings accounts from checking accounts.
Using a savings account for frequent transactions could result in fees or even account conversion to a checking account. Therefore, it’s important to use savings accounts as intended—for saving, not spending.
