Question

1. The three main types of banks (Large Traditional, Credit Union, Online or Online-Only) have many tradeoffs with respect to technology, convenience, personal experience, fees and savings rates. For this question, put aside all of the trade-offs and look only at savings rate offered on savings accounts. Rank the following from highest to lowest on the interest rates they offer to consumers on savings accounts.
A .Large Traditional Bank, Credit Union, Online Bank
B. Credit Union, Large Traditional Bank, Online Bank
C. Online Bank, Credit Union, Large Traditional Bank
D. Credit Union, Online Bank, Large Traditional Bank

Answer 1

 

The option c is correct. The list of accounts that provides the interest rate from the highest to lowest are as follows: online bank, credit union, large traditional bank.

Further explanation:

Interest Rate offered by different types of Bank:

A savings account is an account that earns a small rate of interest on the amount deposited in the account. They provide a check facility and debit card facility. The large traditional bank offers an interest rate of about 0.01% and charges $5 monthly fee if minimum balance is not maintained. In case of online savings accounts, it offers interest rate of about 2.05% and monthly fee is not charged. Credit unions offer interest rates of about 1.75% and the rates vary due to factors such as special promotions and minimum account balance. According to the interest rates, the online bank offers highest interest rate and large traditional banks offer lowest interest rate.

Therefore, option c is correct.

Learn more:

1.      Learn more about the lifetime cost of the loan along with interest

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2.      Learn more about the interest on credit card

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3.   Learn more about compound interest

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Answer details:

Grade: High School

Subject: Business Studies

Chapter: Banking

Keywords: The three main types of banks have many tradeoffs with respect to technology, convenience, personal experience, fees and savings rates. All of the trade-offs and look only at savings rate offered on savings accounts. Rank the following from highest to lowest on the interest rates they offer to consumers on savings accounts, Large Traditional Bank, Credit Union, Online Bank.

Answer 2

The answer is C.  Online Bank, Credit Union, Traditional Bank
But one thing we need to consider despite the amount of interest rates is the safety of our account. Even though it may indeed true that traditional bank has the lowest interest rate from the three, it possesses the best account security compared to the other three because the traditional bank tends to be backed by the Feds.