ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A bank’s savings account serves as a store of value. Bank accounts serve a variety of purposes, one of which is to act as a store of value. A savings account is the most cost-effective and practical way to save money. The banks pay us a pittance in interest on our savings account balances.

Detailed explanation-2: -With the help of money, people can store surplus purchasing power and use it whenever they wish to. Money serves as a store of value for goods in liquid form. Savings in the form of money are not only secure but the possibility of it being disrupted is very low. Besides, money can be carried around and is portable.

Detailed explanation-3: -A Savings Account, by definition, allows you to deposit your money, safe with the bank, so you don’t have to carry it around with you or hide it in that rusted old steel safe at home. Don’t worry, you can withdraw these funds when you need them.

Detailed explanation-4: -Certificate of Deposit (CD): Certificates of deposit or CD, allow you to save your money at a set interest rate for a pre-set period of time-which can range from a few months to several years.

Detailed explanation-5: -Interest-Interest is the additional amount you will pay to a lending institution to borrow money. In terms of savings, interest is the additional amount you will earn for having your money in a bank account or other savings vehicle.