Kylie has $500 to open a checking account. She wants an account with the lowest fees. She sometimes writes a check for more money than she has in her account. She plans on using only her bank's ATM to deposit her paychecks and withdraw cash.
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 pank 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 Kylie?
Answer (2)
Account A offers overdraft protection, no ATM fees, and no monthly fees, fitting Kylie's needs and budget.
Account B lacks overdraft protection and has a monthly fee.
Account C lacks overdraft protection and has ATM fees and a potentially high monthly fee.
Account D lacks overdraft protection and has a potential monthly fee.
Therefore, Account A is the best choice for Kylie: A
Explanation
Understanding Kylie's Needs Kylie needs a checking account that fits her specific financial habits. Let's break down what's important to her: she has $500 to deposit, wants low fees, occasionally overdraws her account, and will only use her bank's ATMs. We need to find the account that best fits these needs.
Analyzing Account A Account A requires a minimum balance of $500, which Kylie meets. It offers 0.1% interest, overdraft protection, no ATM fees, and no monthly fees. Overdraft protection is crucial for Kylie since she sometimes overdraws her account.
Analyzing Account B Account B only requires a minimum balance of $250, which Kylie also meets. However, it offers no overdraft protection, which is a significant drawback for Kylie. It also has a $5 monthly fee.
Analyzing Account C Account C requires a minimum balance of only $50, which Kylie easily meets. However, it doesn't offer overdraft protection and charges $2 per ATM transaction. The $10 monthly fee can be waived with direct deposit, but we don't know if Kylie has direct deposit, so we'll assume she pays the fee.
Analyzing Account D Account D requires a minimum balance of $100, which Kylie meets. It doesn't offer overdraft protection and charges $0 per ATM transaction. The $5 monthly fee can be waived with direct deposit, but again, we don't know if Kylie has direct deposit, so we'll assume she pays the fee.
Comparing the Accounts Comparing all the accounts, Account A stands out as the best option for Kylie. It's the only account that offers overdraft protection, which is essential for her. It also has no ATM fees and no monthly fees. While other accounts might seem cheaper at first glance, the lack of overdraft protection could lead to significant fees if Kylie overdraws her account.
Conclusion Therefore, the best checking account for Kylie is Account A.
Examples
Choosing the right bank account is similar to selecting the best tool for a job. Kylie needs an account that matches her spending habits and financial situation. Overdraft protection is like a safety net, preventing costly mistakes when she accidentally spends more than she has. By carefully comparing the features and fees of different accounts, Kylie can make a smart choice that saves her money and provides peace of mind. This careful evaluation is similar to choosing the right insurance policy or investment strategy, where understanding the terms and conditions is crucial for making informed decisions.
Kylie should choose Account A because it meets her minimum balance requirement, provides overdraft protection, has no ATM fees, and charges no monthly fees. This account best fits her financial needs and habits, especially since she occasionally overdraws. Compared to other options, it offers the most benefits for her situation.
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