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Why do banks offer higher interest on savings accounts than on checking accounts?

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The benefit: Savings accounts typically have higher interest rates than checking, making it easy for you to grow your money faster. ... Going over that limit can result in a fee or, if you do it multiple times, your bank might convert the account to checking.

The benefit: Savings accounts typically have higher interest rates than checking, making it easy for you to grow your money faster. ... Going over that limit can result in a fee or, if you do it multiple times, your bank might convert the account to checking.

2-4-7 has low operating costs

The 2-4-7 bank must be an online bank only. Online-only banks provide banking services, just like traditional banks. However, they offer higher interest rates to their customers as compared to traditional banks.

Online-only banks do not require branches to serve customers; neither do they do not need to hire a large number of employees. Their transactions are done via the internet. An online-only bank, therefore, has low operating costs as it does not pay rent for several branches and has a lean staff. Online banks pass the benefits of low operating costs to customers in the form of higher interest rates.

Online-only banking is a new concept in the banking industry. Online banks are using high interest rates to popularize the concept and attract customers.

Banks offer higher interest rates for savings and checkings accounts C) to encourage people to put money in savings and checking accounts. By offering money back for the amount of money put into a savings or checking account it creates a habbit for people to open these accounts and deposit their money into them. It allows the bank to 'own' the money and it allows those with the accounts to make some money while it's deposited in there.

The correct answer is C.

It is possible that in a certain moment a bank needs liquidity (money in cash). Therefore, in order to attract customers that will deposit their money in savings or checking accounts in this bank, it needs to offer them an attractive retribution.

The interest rate will determine the amount that the bank has to pay to the depositor who opens an account. The higher the interest rate, the higher the retribution offered to investors in exchange for their money.

Because banks can increase deposit interest rates to encourage customers to lend, or lower loan ratesto incentivize customers to borrow.I believe it would be “C.To encourage people to put money in savings and checking accounts”
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