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Which of the following is a key reason banks do not pay interest on current accounts?

medium Q5 of 15
Banking Awareness - Types Of Bank Accounts
Which of the following is a key reason banks do not pay interest on current accounts?
AFunds are locked
BAccounts are short-term
CHigh transaction cost for banks
DAccounts are risk-free
Step-by-Step Solution

  1. Step 1: Understand bank cost structure.

    Current accounts involve heavy transaction handling.

  2. Step 2: Identify the impact.

    High operational cost prevents interest payment.

  3. Final Answer:

    High transaction cost for banks → Option C

  4. Quick Check:

    More services = higher cost = no interest ✅
Quick Trick: High service cost explains no interest.
Common Mistakes:
  • Thinking current accounts lock funds.
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