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A savings account often has a higher interest rate over a checking account because money sits in a savings longer vs a checking that is constantly have cash flow in and cash flow out.  If you are wanting to earn the most interest it's best to open a savings account that is earning compound interest. Compound interest combines the interest on the principle and also with the money being deposited. This is allowing interest to stack up at a much faster rate.
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The complete question should be: Which type of account will typically have the highest interest rate?

A Checking Account

B Savings Account  

C Money Market Account

D Certificate of Deposit (CD)

Therefore, the type of account that will have the highest interest rate is the certificate of deposit. This implies the correct answer is D.

Further Explanation

A certificate of deposit gives more interest than any other accounts. CD is a saving account but it has a fixed duration, that is, you can save your money for either 1 year, 2 years or more without withdrawal.

The money you save in this account will yield interest and the interest can be more higher if you decide to commit your money for a longer period.  

Also, if you withdraw from your money within the fixed period, then you will be required to pay a penalty.

However, some of the advantages of a certificate of deposits include:

  • Your money is safe because there is coverage of up $250,000 in insurance that is provided by the federal deposit insurance corporation on the funds you save with the bank.
  • Certificate of deposits gives a higher rate than a savings account; their interest rate is also higher than money market funds.
  • You can approach any bank to open a certificate of Deposits and their interest rate differs.

Therefore, if you have cash that you don’t need at present, you can go for a certificate of deposits.  

LEARN MORE:

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