Question

Jorge has $300 for work he performed. He expects to spend the money in the next few weeks to buy a new bike. Which type of account will be best for Jorge?
ACertificate of Deposit (CD)
BMoney Market Account
CSavings Account
DChecking Account

Answer 1

The correct option is D.
Checking account is appropriate for Jorge in this situation because he plans to remove the money from his account in a few weeks time.
The major difference between saving account and checking account is that, saving account is majorly used to save and accumulate money for a medium or long time goals or for emergencies. The banks can count on the money staying in saving account for some time and a great part of it is not hold on reserve.
But a checking account is an instant access account. Money put in this account are usually hold in reserve by the banks because the owners can decided to withdraw at any time; banks can lend out money from checking accounts, so they make money on the accounts by charging fees.