Which term describes the money earned on funds deposited in a bank account?

The correct term that describes the money earned on funds deposited in a bank account is interest. When you deposit money in a bank, the bank uses those funds for lending and other investments, and in return, it pays you a percentage of the amount deposited, typically as an annualized rate. This payment is known as interest.

Interest serves as a reward for the opportunity cost of tying up your funds in the bank. It's crucial for savings accounts and other deposit accounts, where the primary purpose is to store money while also earning a return. The amount of interest earned will depend on the interest rate and the duration the money remains in the account.

Dividends typically refer to earnings distributed to shareholders from a company's profits, not from banking deposits. Capital gains relate to the profit earned from selling an asset for more than what was paid for it, which does not apply to money held in a bank account. Fees are charges imposed by the bank for various services, unrelated to the earning of money on deposited funds.