Chapter 14.2, Problem 1R

To determine

To evaluate: The significance of overdraft checking, electronic funds transfer, Automatic teller machine.

Explanation of Solution

An overdraft facility is a loan agreement made with a bank that allows an account holder to use or borrow more money than what was deposited in account. The overdraft facilities work like an authorized loan.

Electronic funds transfer; is transferring of money through electronically from one to one bank, either in a multiple institutions or in a one financial center. Digital payments improve transparency and surveillance, reducing the risk of corruption and robbery.

Automatic teller machine, holders of the bank account can utilize their finance in bank deposit or credit accounts by using ATM for transactions of money, and also can withdraw, check balance, as well as credit transfer from and to cell phones.

Economics Concept Introduction

Introduction: Innovation is extremely important to banks, because it provides fresh and convincing ways of attracting new business and growing customer loyalty. Yet creativity requires a degree of risk, and risk isn't a bank buddy. Banks effectively earn a living by preventing and minimizing it.