Question

Why would banks offer higher interest rates for savings and checking accounts? A) To encourage people to spend money in the economy. B) To discourage people to spend money in the economy. C) To encourage people to put money in savings and checking accounts. D) To discourage people to put money in savings and checking accounts.

Answer 1

Banks offer higher interest rates for savings and checkings accounts C) to encourage people to put money in savings and checking accounts. By offering money back for the amount of money put into a savings or checking account it creates a habbit for people to open these accounts and deposit their money into them. It allows the bank to 'own' the money and it allows those with the accounts to make some money while it's deposited in there.