Why do some accounts, like savings accounts at your local bank, earn interest?
Group of answer choices
Because the bank pays you to use your money
Because of inflation
Because those accounts always have great interest rates
Because you deposit money, adding to your principal each month
The correct answer is:
Because the bank pays you to use your money
Interest is earned on savings accounts as a way for the bank to compensate you for allowing them to use your money for loans and investments. By keeping your money in a savings account, you are essentially allowing the bank to use that money to earn interest, and they in turn share a portion of that interest with you.