The higher the interest rate, the more costly it is to keep money in your non-interest-bearing checking account.

Question

Quizplus · Accepted Answer

This is because the higher the interest rate, the more money you could earn by investing or keeping it in an interest-bearing account. Keeping it in a non-interest-bearing checking account would mean that you miss out on potential earnings and therefore the cost of keeping money in this type of account increases with higher interest rates.

The Higher the Interest Rate, the More Costly It Is