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Natasha has $1000 to open a checking account. She can maintain a monthly balance of $600. She also has a savings account at the same bank. Her employer offers direct deposit and she plans to use online bill paying. She writes about eight checks per month. She currently uses the ATM machines at several different banks. Natasha sometimes overdraws her account.



\begin{table}

\captionsetup{labelformat=empty}

\caption{Bank Account Terms and Conditions}


Account AAccount BAccount CAccount D

Minimum Balance		\$500\$250\$100\$1000

Interest		0.2\%0\%0\%0.2\%

Overdraw Fees		\$0 if linked with savings account or \$40 per overdraw\$35 per overdraw\$25 per overdraw\$40 per overdraft

ATM Usage/Fees		\$0 for all ATMs\$0 for ABC bank ATMs /\$3 for non-ABC bank ATMs\$3 per transaction\$2.50 per transaction

Monthly Fee		\$10 or \$0 with direct\$0\$0\$7 or \$0 with




\end{table}

Verified Answer :

  • Account A is selected because it meets the minimum balance of \(\$600\).
  • It offers zero overdraw fees through savings account linkage and zero fees for all ATM usage.
  • The \(\$10\) monthly maintenance fee is waived through direct deposit.
  • All other options (B, C, and D) are less favorable due to higher potential fees or failure to meet the minimum balance requirement, making Account A the optimal choice.
  • Final choice: \(\boxed{\text{Account A}}\).

Explanation

  1. Analysis of Financial Requirements

Natasha's financial situation and requirements are defined as follows: she maintains a monthly balance of \(\$600\), utilizes direct deposit, frequently uses ATMs at various locations, and occasionally overdraws her account. She also has a savings account available for linkage. The goal is to choose an account that minimizes fees, maximizes benefits, and accommodates her banking habits. We evaluate the four options (Account A, B, C, and D) against these criteria: minimum balance requirements, interest earned, overdraw protection, ATM fees, and monthly maintenance fees.

  1. Evaluation of Bank Account Options
  • Account A requires a minimum balance of \(\$500\). Since Natasha maintains \(\$600\), this requirement is met. It offers 0.2% interest, zero overdraw fees when linked to a savings account, zero ATM fees for all networks, and the \(\$10\) monthly fee is waived due to direct deposit.
  • Account B requires \(\$250\), which is met. However, it offers 0% interest, charges \(\$35\) for overdrafts, and imposes a \(\$3\) fee for non-ABC bank ATMs.
  • Account C requires \(\$100\), which is met. It offers 0% interest, charges \(\$25\) for overdrafts, and has a \(\$3\) fee for every ATM transaction.
  • Account D requires \(\$1000\), which is not met by Natasha's \(\$600\) balance. Additionally, it carries a \(\$40\) overdraw fee and ATM fees of \(\$2.50\) per transaction.
  1. Conclusion and Selection

Comparing the options, Account A is clearly superior. It satisfies the minimum balance requirement, provides interest, eliminates overdraw fees through savings linkage, provides unlimited fee-free ATM access, and has no monthly maintenance fee given the direct deposit. In contrast, Accounts B, C, and D would incur significant costs through ATM fees, overdraw fees, or failing to meet balance requirements. Therefore, Account A provides the best financial outcome for Natasha.

Examples

Choosing the right bank account is a practical application of financial planning. By analyzing variables such as average monthly balance, typical transaction habits (like ATM usage), and fee structures, one can avoid unnecessary costs. For instance, if an individual knows they will frequently use out-of-network ATMs, selecting an account with reimbursed or zero ATM fees—like Account A in this scenario—can save hundreds of dollars annually compared to an account charging \(\$3\) per transaction. Evaluating these terms helps in maximizing savings and ensuring account security.

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