What is the primary purpose of a savings account?

The primary purpose of a savings account is to earn interest on deposits. Savings accounts are designed as a secure place for individuals to save their money while earning a small amount of interest over time. This interest compounds, which can help grow savings without any additional effort from the account holder. Savings accounts typically have lower interest rates compared to other investment vehicles, but they offer liquidity and safety, as they are often insured by government agencies like the FDIC in the United States.

In contrast, other options serve different functions. Making frequent transactions is better suited for checking accounts, which are designed for managing daily spending and allow numerous withdrawals and deposits. Managing monthly bills generally involves using checking accounts or budgeting tools rather than savings accounts. Financing a car typically requires a loan or credit service, which is outside the scope of what a savings account offers. Therefore, the focus of a savings account is primarily on accumulating interest to grow savings over time, which underscores why earning interest on deposits is its primary purpose.