Question

A comparison of an interest-bearing checking account and a savings account reveals that: while a now account pays interest, a savings account does not. a now account must be held to maturity, while funds in a savings account are available on demand. deposits in checking accounts are technically demand deposits, but deposits in savings accounts are time deposits. interest earned on now accounts is tax deductible, while interest earned on passbook savings accounts is taxable income.

Answer 1

An interest bearing checking account pays interest while a savings account does not. A savings account are available whenever the owner would like them but an interest bearing checking account must be left alone until it hits maturity. Deposits made into a savings account are timed deposits while those made in an interest bearing checking account are technically demand deposits. The interest earned on a regular passbook savings account is taxable as income but the interest earned in an interest bearing checking account is tax deductible.