3. Banking and Credit

Bank Accounts — Quiz

Test your understanding of bank accounts with 5 practice questions.

Practice Questions

Question 1

A customer maintains an average monthly balance of \700 and makes 10 withdrawals (ATM or checks) each month. Which account choice yields the lowest total monthly cost? Account A: checking charges \10 monthly fee waived if balance ≥\5,000; no transaction fees. Account B: savings charges \5 monthly fee waived if balance ≥\500; no transaction fees. Account C: money market charges \10 monthly fee waived if balance ≥\10,000; allows 6 free withdrawals then \$5 per additional withdrawal.

Question 2

An online money market account offers tiered APY: 0–\$1,000 at 0.4\%, \$1,000–\$5,000 at 0.8\%, and above \$5,000 at 1.2\%. What is the effective APY if you deposit \$8,000?

Question 3

How does the average daily balance method differ from the minimum daily balance method in calculating interest on savings accounts?

Question 4

Account A offers 1.5\% APY with no monthly fee. Account B offers 1.6\% APY with a \$5 monthly maintenance fee. What minimum balance must be maintained in Account B to achieve the same annual net interest as Account A?

Question 5

What is the annual percentage yield (APY) for an account with 1.5\% APR compounded monthly?