Henry is moving and needs to open a new checking account. He is trying to decide between three banks using the chart below:
| Bank X | Bank Y | Bank Z |
|---|---|---|
| No monthly fees if balance stays above $500, otherwise $7 per month | No monthly fees if check card is used less than 6 times per month | $5 monthly fee |
| No minimum balance | $25 minimum balance | No minimum balance |
| Online banking services | Online banking services | Online banking services |
| Non-Bank X ATM fee - $2.00 per transaction | Non-Bank Y ATM fee - $1.50 per transaction | Non-Bank Z ATM fee - $2.00 per transaction |
Henry usually has about $300 in his account at any given time during the month.
Answer (2)
Henry should choose Bank Y as it has the lowest monthly cost of $1.50, assuming he uses his check card under the limit. Bank X costs $9, and Bank Z costs $7, making Bank Y the most economical choice. Thus, the best option for Henry is Bank Y.
;
Calculate the monthly cost for Bank X: $7 (monthly fee) + $2 (ATM fee) = $9.
Calculate the monthly cost for Bank Y: $0 (assuming check card usage is less than 6 times) + $1.50 (ATM fee) = $1.50.
Calculate the monthly cost for Bank Z: $5 (monthly fee) + $2 (ATM fee) = $7.
Compare the costs: Bank Y ( 1.50 ) i s t h ec h e a p es t . T h ere f ore , t h e b es t o pt i o n f orHe n ry i s B ankY : \boxed{Bank Y}$.
Explanation
Understanding the Problem Henry is trying to choose the best checking account among three banks: Bank X, Bank Y, and Bank Z. We need to calculate the monthly costs for each bank based on Henry's banking habits and then compare these costs to determine the most economical option.
Calculating the Cost for Bank X Bank X charges a monthly fee of $7 if the balance stays below $500. Since Henry usually has $300 in his account, he will incur this fee. Additionally, there is a 2.00 f ee f or u s in g an o n − B ank X A TM , w hi c h He n ry d oeso n ce am o n t h . T h ere f ore , t h e t o t a l m o n t h l ycos t f or B ank X i sc a l c u l a t e d a s f o ll o w s : 7 + 2 = 9 $
So, Bank X will cost Henry $9 per month.
Calculating the Cost for Bank Y Bank Y has no monthly fees if the check card is used less than 6 times per month and requires a minimum balance of $25. Henry meets the minimum balance requirement with his usual $300 balance. Assuming Henry uses his check card less than 6 times per month, he avoids the monthly fee. The ATM fee for a non-Bank Y ATM is 1.50 p er t r an s a c t i o n . T h u s , t h e t o t a l m o n t h l ycos t f or B ankYi s : 0 + 1.50 = 1.50 $
Bank Y will cost Henry $1.50 per month.
Calculating the Cost for Bank Z Bank Z charges a flat monthly fee of $5 and a 2.00 f ee f or u s in g an o n − B ank Z A TM . T h e t o t a l m o n t h l ycos t f or B ank Z i s : 5 + 2 = 7 $
Therefore, Bank Z will cost Henry $7 per month.
Comparing the Costs and Determining the Best Option Comparing the monthly costs for each bank:
Bank X: $9
Bank Y: $1.50
Bank Z: $7
Bank Y is the least expensive option for Henry, costing only $1.50 per month, assuming he uses his check card less than 6 times per month.
Final Answer Therefore, based on the given information and calculations, Bank Y is the best option for Henry.
Examples
Choosing a bank account is similar to selecting a subscription service. By comparing monthly fees, transaction costs, and service features, you can find the most cost-effective option. This analysis helps you manage your finances wisely and avoid unnecessary expenses, ensuring you get the best value for your money. For instance, understanding these costs can help you save money each month, which can add up to significant savings over time, just like choosing the right phone plan or streaming service.
