Banks typically pay interest to customers through a savings account, not through a credit card, mortgage, or 401(k) account.

Correct answer

For the statement:

“Banks pay interest to customers through a

  • savings account
  • credit card account
  • mortgage account
  • 401k account”

The correct choice is:

  • Savings account

Why savings accounts pay you interest

  • A savings account is a deposit account where you lend money to the bank.
  • Because the bank uses your deposits to make loans, it pays you interest as a small reward for letting it hold and use your money.

Why the other options are wrong

  • Credit card account :
    • With a credit card, you are borrowing money from the bank, so you pay interest to the bank , not the other way around.
  • Mortgage account :
    • A mortgage is also a loan from the bank for buying property, so again you pay interest to the bank as the borrower.
  • 401(k) account :
    • A 401(k) is a retirement investment account, usually offered by employers, not a simple bank deposit account.
    • Money in a 401(k) can grow from investment returns (like stocks or bonds), not from a bank paying standard deposit interest the way it does on savings accounts.

Quick memory tip

  • If you deposit money with the bank (like in a savings account), the bank is more likely to pay you interest.
  • If you borrow money from the bank (credit card, mortgage), you pay them interest.