In: Finance
How has online banking changed the way consumers select and use various financial services? (LO4.1)
What relationship exists between changing interest rates and the rates of return for various savings accounts, money market accounts, and certificates of deposit of various lengths? (LO4.1)
What fees and deductions may be overlooked when balancing your checking account? (LO4.4)
1. Online banking allows customer to use the internet for financial services as against visiting the physical bank branches. Customer can now do wire transfer to make payments. This type of internet banking omits the needs of the payee and the payer to visit the physical bank to make transactions. Hence time and money is saved by all parties involved. Due to the growing net banking, banks are seen reducing the bank branches across the country.
2. When the interest rates rise, the savings accounts, money market accounts and CD's gives higher return since the Fed increases the interest rate. However, this is true for only short term bonds like the ones listed above. The long term bonds have a negative impact as interest rates rise. This is because there is an inverse relationship between the bond price and interest rates. As rate increase, prices of long term bonds fall and give a lower return to investors.
3. The normal fee that is required to maintaining your bank account and giving you the basic service can be overlooked since this is the basic minimum that is required to be deducted for running your checking account and servicing all the transaction on your account.