Chapter 5, Problem 7FPC

a

Summary Introduction

Case summary: AS a service station owner, has tracked his high, low and average balances in his account. It is required to determine which type of account is better for him it can be seen that average balance account is better for him. How monthly fee can be avoided has been advised to him.

Characters in the case : AS

Adequate information: AS a service station owner considering changing his checking account, it is required to determine the type of checking account is suitable from the available options.

To determine: The type of account is better for A to avoid or minimize fee on balance requirement of checking account.

Introduction:

Checking account balance requirements:Most interest-earning accounts have a minimum balance requirement that if not met, will result in the assessment of a monthly fee of around $10 to $25 a month and forfeiture of any interest earned for the month. Balance requirements are either based on minimum balance or average balance requirement. With a minimum balance account, customer must maintain a minimum balance which will be around $500 to $1,000 in account throughout a specified period usually a month or a quarter. With an average balance account, if the average daily balance drops below a pre stated level usually between $800-$1,200 a service fee is applicable.

b

Summary Introduction

Case summary: AS a service station owner, has tracked his high, low and average balances in his account. It is required to determine which type of account is better for him it can be seen that average balance account is better for him. How monthly fee can be avoided has been advised to him.

Characters in the case : AS

Adequate information: AS a service station owner considering changing his checking account, it is required to determine the type of checking account is suitable from the available options.

To determine: The way A could work to avoid monthly fee of his account.

Checking account balance requirements: Most interest-earning accounts have a minimum balance requirement that if not met, will result in the assessment of a monthly fee of around $10 to $25 a month and forfeiture of any interest earned for the month. Balance requirements are either based on minimum balance or average balance requirement. With a minimum balance account, customer must maintain a minimum balance which will be around $500 to $1,000 in account throughout a specified period usually a month or a quarter. With an average balance account, if the average daily balance drops below a pre stated level usually between $800 to $1,200 a service fee is applicable.