Nathan has $300 to open a checking account. He wants an account with the lowest fees. He plans on using the ATM machine, and his employer offers direct deposit.
Bank Account Terms and Conditions
| | Minimum Balance | Interest | Overdraft Protection | ATM Fees | Monthly Fee |
|---|-----------------|----------|----------------------|--------------------------|------------------------------------|
| A | $500 | 0.1% | yes | $0 for all ATMs | $0 |
| B | $250 | 0% | no | $0 for ABC bank ATMs | $5 |
| C | $50 | 0% | no | $2 per transaction | $10 or $0 with direct deposit |
| D | $100 | 0.1% | no | $0 per transaction | $5 or $0 with direct deposit |
Which checking account would be best for Nathan?
Answer (2)
The best checking account for Nathan is Account D, which has a low minimum balance requirement, no monthly fees if he has direct deposit, and no ATM fees. This makes it the most cost-effective option for his needs. Nathan can easily maintain his account with his $300 opening balance.
;
Account A requires a minimum balance of $500, which Nathan doesn't meet.
Account B has a $5 monthly fee and may have ATM fees.
Account C has $0 monthly fee with direct deposit but charges $2 per ATM transaction.
Account D has $0 monthly fee with direct deposit and $0 ATM fees.
Account D is the best option for Nathan because it has a low minimum balance, no monthly fee with direct deposit, and no ATM fees. The answer is D.
Explanation
Analyzing Nathan's Situation Let's analyze Nathan's situation to determine the best checking account for him. We need to consider his budget, ATM usage, and direct deposit availability.
Checking Minimum Balance Requirements First, let's check the minimum balance requirements for each account:
Account A: $500 minimum balance. Nathan has only $300, so he doesn't meet this requirement.
Account B: $250 minimum balance. Nathan meets this requirement since he has $300.
Account C: $50 minimum balance. Nathan meets this requirement.
Account D: $100 minimum balance. Nathan meets this requirement.
Considering Monthly Fees with Direct Deposit Next, let's consider the monthly fees, taking into account that Nathan has direct deposit:
Account A: $0 monthly fee.
Account B: $5 monthly fee.
Account C: $10 monthly fee, but $0 with direct deposit. So, Nathan would pay $0.
Account D: $5 monthly fee, but $0 with direct deposit. So, Nathan would pay $0.
Analyzing ATM Fees Now, let's analyze the ATM fees. Nathan plans on using ATMs, but we don't know if he'll always use ATMs from a specific bank:
Account A: $0 ATM fees for all ATMs.
Account B: $0 ATM fees for ABC bank ATMs, but we don't know the fees for other ATMs. Since Nathan might use other ATMs, there could be fees.
Account C: $2 per ATM transaction.
Account D: $0 ATM fees for all ATMs.
Comparing Accounts and Determining the Best Option Let's compare the accounts that Nathan qualifies for (B, C, and D) and consider the fees:
Account B: $250 minimum balance (Nathan meets), $5 monthly fee, and potential ATM fees if he doesn't use ABC bank ATMs.
Account C: $50 minimum balance (Nathan meets), $0 monthly fee with direct deposit, but $2 per ATM transaction.
Account D: $100 minimum balance (Nathan meets), $0 monthly fee with direct deposit, and $0 ATM fees.
Considering Nathan wants the lowest fees and might use any ATM, Account D is the best option because it has a low minimum balance, no monthly fee with direct deposit, and no ATM fees.
Final Answer Therefore, the best checking account for Nathan is Account D.
Examples
Understanding different bank account options and their associated fees is crucial in personal finance. For instance, choosing the right account can save you money on monthly fees and ATM charges. This is similar to selecting the best loan or credit card, where comparing interest rates and fees can lead to significant savings over time. By carefully evaluating the terms and conditions, you can make informed decisions that align with your financial goals and habits.
