James wants an account with the lowest fees. Which checking account would be best for James?
| Monthly Fee | $10 or $0 with direct deposit | $0 | $10 | $12 |
| --------------------------------- | ----------------------------- | ---- | ---- | --------------------------------- |
| Annual Fee | $0 | $36 | $0 | $0 |
| Online Bill Payment | free | free | free | $0.50 per transaction |
| Deposit to open | $50 | $50 | $500 | $1,000 |
| Check Limits | unlimited | 50 per month | unlimited | unlimited |
A. Account A
B. Account B
C. Account C
D. Account D
Answer (2)
Account A has $0 annual fees with direct deposit.
Account B has $36 annual fees.
Account C has $120 annual fees.
Account D has at least $144 annual fees.
Account A is the best option if James uses direct deposit, otherwise Account B is likely the best.
Assuming James can use direct deposit, the best account for James is: A cco u n t A
Explanation
Analyzing the Accounts We need to analyze the fees associated with each account to determine the best option for James. The key factors are monthly fees, annual fees, and online bill payment fees. We'll consider two scenarios for Account A: with and without direct deposit.
Account A Costs Account A:
With direct deposit: Monthly fee = $0, Annual fee = $0, Online bill payment = Free. Total annual cost = $0.
Without direct deposit: Monthly fee = $10, Annual fee = $0, Online bill payment = Free. Total annual cost = $10 * 12 = $120.
Account B Costs Account B:
Monthly fee = $0, Annual fee = $36, Online bill payment = Free. Total annual cost = $36.
Account C Costs Account C:
Monthly fee = $10, Annual fee = $0, Online bill payment = Free. Total annual cost = $10 * 12 = $120.
Account D Costs Account D:
Monthly fee = $12, Annual fee = $0, Online bill payment = $0.50 per transaction. Total annual cost = $12 * 12 + ($0.50 * number of transactions * 12) = $144 + $6 * (number of transactions).
Determining the Cheapest Account Comparing the accounts:
If James can use direct deposit, Account A is the cheapest with $0 annual cost.
If James cannot use direct deposit, we compare Account A ($120), Account B ($36), Account C ($120), and Account D ($144 + $6 * number of transactions).
In this case, Account B is the cheapest as long as James doesn't need to write more than 50 checks per month.
Final Decision Since James wants the account with the lowest fees, and we don't have information about the number of online bill payments he makes or whether he can use direct deposit, we need to consider the scenarios:
If James uses direct deposit, Account A is best.
If James doesn't use direct deposit, and writes less than 50 checks per month, Account B is best.
Final Answer Assuming James can use direct deposit, Account A is the best option. If he cannot use direct deposit, and he doesn't write too many checks, Account B is the best option. Without more information, we will assume James can use direct deposit.
Examples
Understanding the fees associated with different bank accounts is similar to comparing different phone plans or subscription services. By calculating the total cost of each option, you can make an informed decision that saves you money in the long run. This involves considering monthly fees, usage charges, and any additional costs to find the most economical choice for your needs.
The best checking account for James, if he can use direct deposit, is Account A, which has no fees. If he cannot use direct deposit, Account B is the cheapest option with a total annual cost of $36. Therefore, it is most beneficial for James to opt for Account A if he qualifies for direct deposit.
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