What characterizes an interest-bearing account?

An interest-bearing account is primarily characterized by its ability to earn interest on the funds that are deposited into it. This means that the money you keep in this type of account accrues additional value over time, which is calculated based on the interest rate set by the financial institution. The primary function of these accounts is to provide a return on savings, encouraging individuals to deposit and retain their money for a longer duration.

While some interest-bearing accounts may require maintaining a minimum balance to avoid fees, this is not a defining characteristic of all such accounts. Additionally, not all interest-bearing accounts are exclusively available through online banks, as many traditional banks and credit unions also offer these types of accounts to their customers. Finally, while withdrawals can occur from these accounts, their key feature lies in the potential to earn interest, rather than being primarily designed for transaction purposes.