Which of the following is a type of savings vehicle designed primarily for saving rather than everyday spending?

Introduction / Context:
In personal finance, a savings vehicle is an account or product that helps individuals store money safely while earning some return. Savings vehicles are different from transaction accounts that are designed mainly for frequent payments and withdrawals. This question asks you to identify which options represent savings vehicles rather than everyday spending accounts, focusing on certificates of deposit and money market accounts.

Given Data / Assumptions:
- Options include a checking account, a certificate of deposit and a money market account. - We are asked which are types of savings vehicles. - We assume typical bank products used by retail customers. - Checking accounts are mainly for transactions, while CDs and money market accounts are mainly for saving.

Concept / Approach:
A certificate of deposit is a time deposit where you commit money for a fixed period in exchange for a fixed interest rate. Early withdrawal usually incurs a penalty, which encourages saving. A money market account is an interest bearing deposit account that often pays higher rates than a regular savings account but may require a higher minimum balance. Both products are designed to store money and earn interest, making them savings vehicles. In contrast, a checking account is primarily a transaction account used for paying bills, writing cheques or using a debit card. Although a checking account might earn minimal interest in some cases, its main purpose is not long term saving.

Step-by-Step Solution:
Step 1: Evaluate option B. A certificate of deposit is clearly a savings vehicle since it locks in funds for a period to earn interest. Step 2: Evaluate option C. A money market account also pays interest and is marketed as a place to hold savings, so it qualifies as a savings vehicle. Step 3: Evaluate option A. Although you can hold some funds in a checking account, it is mainly used for transactions and often pays little or no interest, so it is not the best example of a savings vehicle. Step 4: Recognise that both B and C describe savings oriented products, so option D, which combines them, is the best answer.

Verification / Alternative check:
Look at how banks advertise these products. Certificates of deposit and money market accounts are usually listed under savings and investments, emphasising interest earnings and safe storage of funds. Checking accounts are listed under everyday banking, highlighting ease of access, debit card use and bill payments. This marketing distinction reflects the difference in primary purpose and confirms that CDs and money market accounts are the true savings vehicles in the list.

Why Other Options Are Wrong:
Checking account alone: This is mainly a transaction account, not a dedicated savings vehicle. Certificate of deposit only: While correct as a savings vehicle, this answer ignores that money market accounts also serve the same function. Money market account only: Same issue as above; it is a savings vehicle but not the only one listed.

Common Pitfalls:
Some learners think that any bank account where money is stored is a savings vehicle. In practice, the key difference is how easy it is to withdraw funds and how much interest is paid. Savings vehicles tend to encourage longer holding periods and offer higher interest, sometimes with withdrawal restrictions. Another pitfall is confusing money market mutual funds with money market deposit accounts. While related, they are not exactly the same product. In this question, the focus is on bank style savings vehicles used by individuals.

Final Answer:
The correct option is Both a certificate of deposit and a money market account, because these accounts are specifically designed to help individuals save money and earn interest, unlike a checking account which is primarily for daily transactions.