Question

Randy, a​ student, has 264$ o deposit in a new chequing​ account, but Randy knows he will not be able to maintain a minimum balance. He will not use an ATM​ card, but will write a large number of cheques. Randy is trying to choose between the unlimited check writing offered by South Trust and the low​ per-check fee offered by Sun Coast. How many checks would Randy have to write each month for the account at South Trust to be the better​ option?

in order to copy the contents of the data table below (Click on the icon here into a spreadsheet.) $1 $1 South Trust Bank Sun Coast Bank ATM charges: Home bank Free Free Other bank $1.28 per use $1.28 per use Checking: Minimum deposit Minimum balance required $500 N/A to avoid fees* Monthly fees $10.50 $3.50 Check-writing charges Unlimited Each cheque 50 cents * N/A means monthly fees apply irrespective of account balances.

Answer 1

Answer: Randy has to write more than 14 checks for South Trust Bank to be more feasible. [Break-even = 14 checks]

Notes:

• As Sun Coast charges $0.50 per check and South Trust does not charge anything, any number of checks above the Break-even between the two banks would be considered more feasibly towards South Trust
• As deposit is less than $500, monthly charges of $10.50 apply for South Trust Bank
• For Sun Coast bank, $3.50 is applicable despite the amount of deposit

Calculations

Checking	Formula	South Trust Bank	Sun Coast Bank
Minimum Balance required to avoid fees	A	$500.00	N/A
Monthly Fees	B	$10.50	$3.50
Check Writing Charges	C	$0.00	$0.50 per Check
Deposit	D	$264.00	$264.00
Monthly Charges	B	$10.50	$3.50
Balance after Charges	E = D - B	$253.50	$260.50
Break-even Checks	Formula	South Trust Bank	Sun Coast Bank
Difference between Balance	F = ESun Cost - ESouth Trust		$7.00
Number of Checks			14
Cross check	Formula	South Trust Bank	Sun Coast Bank
Number of checks	F	14	14
Cost for checks	G = F x C	$0.00	$7.00
Balance after check charges	H = E - G	$253.50	$267.50