Other Bank Accounts Answers

Ian invests $13,670 in a savings account at his local bank which gives 1.9% simple annual interest. He also invests $6,040 in an online savings account which gives 4.5% simple annual interest. After nine years, which one will have earned more interest, and how much more interest will it have earned, to the nearest dollar?

Greg invests $2,680 in a CD paying 7.0% interest, and $3,060 in an online savings account paying 4.5% interest. How much more interest will the CD have earned than the savings account after 1 year?

Gareth has $2,000 to invest. Putting the money in a savings account at his local bank will earn him 2.2% annual interest and gives him the ability to make ATM withdrawals from that bank’s ATMs. Putting the money in an online savings account will earn him 4.85% annual interest, but he will be charged $3 every time he makes an ATM withdrawal. Assuming that Gareth’s ATM withdrawals do not affect the amount of interest he earns, roughly how many ATM withdrawals must Gareth make every year for the local savings account to be a better deal than the online savings account?

How is email a useful component of online banking? I. Email alerts can be used to warn you before you overdraw your account. II. You can have your bank statements emailed to you, getting them to you faster. III. Only emailed bank statements can be used to support electronically-filed tax returns.

Which of the following are advantages of certificates of deposit (CDs) over savings accounts?I. CDs are more readily accessible than savings accounts.II. CDs offer greater interest rates than savings accounts.III. CDs have greater FDIC backing than savings accounts.

What is the most suitable option for Norm to invest his $15,000, considering his daughter's upcoming college plans and the associated interest rates?

Rate the following bank accounts from most to least liquid: CD, savings account, checking account, money market account.

You have $3,750 to deposit. If you deposit the money in a savings account at your local bank, you will earn 1.75% annual interest and will be able to make ATM withdrawals at your bank’s ATMs. If you deposit the money in an online savings account, you will earn 3.25% interest, but you will be charged $4 every time you make an ATM withdrawal. Assuming that your ATM withdrawals do not reduce the amount of interest you earn, roughly how often must you make an ATM withdrawal for the local savings account to be a better deal than the online savings account?

Identify the following bank account.This account offers a good interest rate, but tends to require a certain minimum deposit. Usually, this account becomes mature in a matter of several months. You can withdraw money from this account before it becomes mature without penalty, but there is a limit to how frequently you can withdraw it.

Why do certificates of deposit tend to offer better interest rates than money market accounts?

Which of these can be considered “online banking?”I. A brick-and-mortar bank that allows its customers to transfer money online.II. A bank that has only a few branches but has customers depositing money online.III. A bank that does not exist as a real building, but only has an internet presence.

Some online banks offer “online bill pay.” What does this mean?

Katherine invests $7,770 in a six-month money market account giving 5.8% simple annual interest and $12,500 in a three-year CD giving 7.25% simple annual interest. Assuming that Katherine does not reinvest or renew these investments, how much money will she have when both investments reach maturity, to the nearest dollar?

Orlando invested $16,000 in an eight-year CD bearing 6.5% simple annual interest, but needed to withdraw $3,500 after five years. If the CD’s penalty for early withdrawal was one year’s worth of interest on the amount withdrawn, when the CD reached maturity, how much less money did Orlando earn total than if he had not made his early withdrawal?

Select the correct statement and rationale relating the interest rates of online banks to those of traditional banks.

A bank offers a four year cd with an interest rate of 2.75%. The penalty for early withdrawal from the CD is nine months of simple interest, calculated on the amount withdrawn. Rachel invests $6,200. If she withdraws $2250 after one year, how much will the penalty be? Round answer to the nearest dollar.