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Online-only banks save money by not owning physical branches with staff and operating costs. Because of this, they are able to offer slightly higher interest rates on savings accounts, lower and more liberal fee structures on checking accounts . Online-only banks provide the usual variety of standard financial products such as CDs, MMAs, home loans, car loans, and credit cards. Since you can’t visit a branch, customer service is important. With online-only banks, customer service is available 24/7 by email, phone, and chat. Online-only banks were once considered a novelty because of their nontraditional structure. They are now a solidly mainstream alternative to traditional banks . There is plenty of information about online-only banks and their products, services, rates and fees on the web. Some popular online-only banks are Ally Bank, Bank5 Connect, and Discover Bank. Virtual Currency. When you think of money, you probably think of dollars, euros, yen, etc. Money is created by governments and used by the particular country as its own currency. Virtual currency is very different. For one thing, there is no government involved. It is money that originates with a private developer with no ties to any government or particular country . It is electronically created via a super-secure encrypted code. Virtual currency is bought through digital exchanges and stored in e-wallets, not in bank accounts. Transactions are peer-to-peer (P2P) meaning the transaction is made directly, with no bank or government intermediary. For example, say you want to buy a yak from a yak seller in Kathmandu. Normally, you would have to go through a bank to convert your dollars into Nepalese rupees. The transaction would require withdrawing and depositing funds in your mutual bank accounts. However, if virtual currency is used, the transaction can be made directly (peer-to-peer) with no bank or government involvement. There are nearly 300 virtual currencies in operation around the world. Bitcoin is one of the most popular. Bitcoin values can fluctuate which can cause your account to gain or lose value. Nevertheless, it has gained mainstream acceptance around the world. Bitcoins can be purchased with dollars or any other currency from a Bitcoin exchange. Many people use their Bitcoin e-wallets like bank accounts. Bitcoin’s acceptability as money is rising, particularly for making online purchases. It is likely that, at some point in your future, you will encounter or even use virtual currency. Reflect on Learning: Has anyone used a virtual currency? What kind? What is your opinion of the VC? Do you understand how virtual currencies are different from traditional money? Answer: No government is involved in its creation; it is stored in e-wallets not banks; values are unstable. PRODUCT PREVIEW
VI. The Bank Advantage: Deposit Insurance America learned its lesson the hard way in the Great Depression. Banks had lent out customers’ deposits and made many risky investments. When the stock market fell, depositors rushed to the banks to get their money out of their accounts. The banks did not have enough in deposit reserves to repay their depositors. Millions of people lost their life savings. It’s estimated that 4,000 banks failed in 1933 alone. It was a catastrophe. The Banking Act of 1933 was enacted to restore confidence in the system. This Act created the Federal Deposit Insurance Corporation (FDIC), an
Fin Lit Trivia Fin Lit Trivia Fin Lit Trivia
Hide the Cash! People were so distrustful of banks during the Great Depression that many hid their cash in mattresses, walls, hollowed out piano legs, secret cabinets and under floor boards.
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Chapter 2 | Battler of the Banks
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