Selecting a Bank

Jack plans on using network ATMs about 4 times per month. What would be Jack's total estimated annual fees for a checking account with direct paycheck deposit, one overdraft per year, and no 2nd copies of statements?

$104

Based upon past experience, Barry expects no overdrafts. He expects no 2nd copies of statements. Barry estimates that he will use network ATMs about 5 times a month with either bank. Barry decides in the end to choose EECU. Assuming that both banks provide the necessary services equally well, and based upon the tables of fees given above, how much can Barry reasonably expect to save annually by choosing EECU in this case over E-town bank?

$78

Downtown Bank offers a checking account. The bank charges a fee for overdrafts, monthly maintenance for balances below $300, out-of-network ATM withdrawals, and more than three money transfers in a month. What are three things you can do to avoid fees from a Downtown Bank checking account?

1. Always keep more than $300 in your account. 2. Always keep track of your balance 3. Avoid making out-of-network ATM withdrawls. 4. Avoid making more than three money transfers each month.

Fixed interest rate

A fixed interest rate is an interest rate that does not change for the life time of the account.

When choosing a bank, why might ATM availability be valuable to someone who values convenience over cost?

A greater availability of ATMs may make it easier to do bank transactions. Someone may choose this availability over a higher savings interest rate.

Variable interest rate

A variable interest rate is an interest rate that can change over the life time of the account.

Overdraft fee

An overdraft fee is charged to an account when withdrawals from it exceed the available funds and cause a negative balance. This fee is incurred for every transaction that exceeds the available funds.

Emma usually has about $1000 in her account at any given time during the month. She usually visits the ATM twice a week and is interested in banking online options. Bank R has 10 ATMs within a 5 mile radius of Emma's home. Bank S has 1 ATM 10 miles from Emma's work. Which bank should she choose?

Bank R

Henry is moving and needs to open a new checking account. He is trying to decide between three banks using the chart below: Henry usually has about $300 in his account at any given time during the month. He limits his ATM visits to one per week and is interested in banking online options. Bank X and Bank Z have 5 ATMs within a 5 mile radius of Henry's work and his new home. Which bank should he choose?

Bank Z

Jenna wants to save a $10,000 trust fund she received when she turned 21, and add $50 per month as emergency funds. She has narrowed her search for a savings account to 2 banks, Bank A and Bank B. Bank A pays a fixed rate of interest, and Bank B pays a variable rate, but both rates are currently the same. Jenna's trusted friend advises her to make the selection based upon her banking needs in consideration of the other services and fees of the banks, because the interest rates are the same. If you were advising Jenna about how to choose an account based upon her own needs, what advice below would you not give her?

Choose the variable rate because if it goes up, you will make a lot of money that will pay for the fees.

Jan wants to save a $2000 gift from her grandparents, and add $50 per month as emergency funds. She has narrowed her search for a savings account to 2 banks, Bank A and Bank B. Bank A pays a fixed rate of interest, and Bank B pays a variable rate, but both rates are currently the same. What advice would you give Jan about how to choose an account based upon her own needs? I. The fees and services will make a much bigger difference than the type of interest while your balances are small. II. The more that you expect to save, the more you should think about what effect the interest rates might have on your finances. III. Choose the variable rate, because no matter what the fees are, if it goes way up, you could become richer.

I and II

Ben is looking at banks for checking and savings accounts. Some offer car loans and others do not. Ben may need a car loan sometime in the next few years. But Ben wonders if he should really ask what kinds of loans the bank makes, because he is getting a checking account, not a car loan. Which statement below gives the best reason for Ben to consider loan availability in choosing a checking account?

If he needs a car loan in the future, he will have a relationship of trust with the bank.

Steven is looking at banks for checking and savings accounts. Some offer home loans and others do not. Steven may need a home loan sometime in the next few years. But he wonders if he should really ask what kinds of loans the bank makes, because he is getting a checking account, not a home loan. Which statement below gives the best reason for Steven to consider loan availability in choosing a checking account?

If he needs a home loan in the future, he will have a relationship with the bank.

You are examining your choices of banks to open a new savings account. Costs include monthly maintenance fees and statement copy fees. Income can come from ___________.

Interest on deposits

Why is it sometimes easier to open an account with a bank rather than with a credit union?

Most credit unions require some kind of affiliation, but banks will let anyone with money open an account.

If you were teaching a foreign visitor about checking and savings accounts at banks and credit unions in the USA, which item below would you say consumers of these accounts usually do not have as a protection of their rights?

No automatic fees charged to the account.

Which of the following items may be a good consideration in selecting a bank?

Number of ATMs or bank branches near where you live, shop, work, or travel and knowledge of personal usage habits and needs

Based upon past experience, Bill expects to accidentally overdraft the account 2 times per year, unfortunately, due to unexpected charges and miscommunications. He expects no 2nd copies of statements, and to use network ATMs 4 times per month with State Bank (due to less in-network ATMs being available), or 2 times per month with Common Bank. He has $2500 to deposit to an emergency savings account for overdraft protection, and thinks that the balance will be enough to cover most all overdrafts in the future if automatic transfers are made when needed. Based on the tables of fees, which bank is expected to cost the least amount in fees per year?

State Bank is expected to cost the least.

Anna is choosing a bank and a checking account. She would be well-advised to consider her personal needs and values in the analysis, not only the bank's features.

T

Which of these is not a factor you need to consider when choosing a bank?

The amount of money you paid in income taxes last year

Macky wants to open a checking account. He is examining different banks and banking accounts. Then he will choose a bank account for his needs. Which of the following statements should not be one of Macky's reasons for choosing a bank?

The first bank Macky considered offered a chance to win a prize upon opening an account

Minimum opening balance

The minimum opening balance is the initial dollar amount set by the bank that is required to open a account.

Which of the following items may not be a good consideration in selecting a bank?

The word "FREE" is prominently displayed in the marketing pamphlet.

Which statement below gives the best reason for considering personal needs, values, and circumstances in selecting a bank account?

This information can lead to a better match between account features and the person's needs

Vítor knows he must prepare and possibly prevent overdraft funds fees since they are charged automatically. Which statement below would be the least effective element of a plan Vitor could use to accurately estimate (or minimize) overdraft fees on the account?

Use the debit card for a large number of small purchases and check the balance later.