Final answer:
Individuals may trust alternative banking services over traditional banks due to the potential for higher returns, personal distrust, accessibility issues with conventional banks, or the desire for more personalized services. While banks offer ease of use, insured safety, and are essential for a complex economy, alternatives can provide different benefits appealing to certain individuals.
Step-by-step explanation:
Some individuals place more trust in alternative banking services due to various reasons that appeal to their financial needs and perceptions of security. While bank accounts offer easy access and high security, especially insured by the Federal Deposit Insurance Corporation (FDIC), some people may seek higher returns, have distrust in conventional banks, or find traditional banking inaccessible or unappealing due to past experiences, personal beliefs, or the desire for more personalized services that typical banking institutions may not offer.
Banks facilitate a wide range of transactions by providing a reliable place to store money, whether in a checking or savings account, enabling businesses and individuals to function efficiently in a complex economy. With the ability to directly withdraw funds, write checks, or use debit cards, banks offer a level of convenience that is crucial in everyday financial activities. However, alternative banking services may sometimes present more appealing opportunities for those searching for different benefits than those provided by traditional banks.
The FDIC's guarantee of deposits up to $250,000 ensures that money in bank accounts is extremely safe, but this doesn't always sway every individual. Low risk with banks typically means a low rate of return but with high liquidity. For some, however, a different balance of risk and potential return, alongside other considerations, might make alternative services more attractive.