Brad Kellogg maintains a monthly balance in his checking account of approximatel

Question

Brad Kellogg maintains a monthly balance in his checking account of approximately $150, writes about 25 checks a month, and makes three deposits each month. How would Brad decide which one of the following checking accounts he should use? Bank A: regular checking account with a monthly fee of $4.50 for an unlimited number of checks, no monthly balance requirement, and no interest earnings; Bank B: interest-bearing checking account paying 4 percent interest on balances over $300 and a monthly service charge of $6 if the balance falls below $300; Bank C: special checking account that charges 35 cents a check and 20 cents for each deposit, no interest earnings; or Bank D: minimum-balance account that requires a $200 minimum balance to avoid the $10 monthly fee, two percent interest paid if the balance remains above $400.

Explanation / Answer

a minimum-balance account that requires a $200 minimum balance to avoid the $10 monthly fee; interest earned when balance is above $400. Brad should compare the expected monthly cost for each situation (service charges, costs per check, other fees) with any earnings for interest. In addition to the financial aspects of each account, he should also consider the convenience, location, and other services offered by the financial institution.

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