Question

Answer Point Value Points Earned American Credit Union First National Bank Hillsboro Bank Internet Bank ATM Charges Home bank Free Free Free Free $1 4 free then $2 per use $3 $500 $200 $5 $6 Use of service at competitor's bank Checking Account Minimum balance required to avoid fees $400 $250 Monthly Maintenance Fee $13 7 free checks, then $1 per Per Check Processing Fees Unlimited check 1. Selecting a Bank. Sean wants to open a checking account with $275. Sean will auto deposit his pay checks into the account and estimates he will write 10 checks per month and use his ATM card only at the home bank, Sean believes he can maintain $225 balance in his account. Which bank should Sean choose to minimize fees? 12 free checks, then $1 per check $0.50 per check Work: 2. Selecting a Bank. Spencer plans to open a checking account with her $1,400 tax refund check. She believes she can maintain a $550 minimum balance. Also, she estimates that she will write 12 checks per month and will use other banks ATMs as many as 5 times per month. Which bank should Spencer choose to minimize fees? Work:

Answer 1

Solution Part 1: Selecting a bank for Sean Let us first calculate charges for all the banks as per given requirement of Sean. Particulars American First National Hillsboro Bank Internet Bank Credit Union Bank 03 05 Check Processing Fees ATM Charges Minimum Balance Charges Total Fees I | 13 13 7 10 6 6 0 5 *Note: It is assumed free check are available per month Hence, Sean must select Internet Bank as it has Minimum Total Fees Part 1: Selecting a bank for Spencer Let us first calculate charges for all the banks as per given requirement of Spencer. Particulars Check Processing Fees ATM Charges Minimum Balance Charges Total Fees American First National Hillsboro Bank Internet Bank Credit Union Bank 05 06 5 5 2 3 0 0 0 0 5 10 12 19 *Note: It is assumed free check are available per month. It is assumed ATM charges are given per use. Hence, Spencer must select Hillsboro Bank as it has Minimum Total Fees