Other Bank Accounts Answers

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?

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?

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?

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

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 If the CD’s penalty for early withdrawal was one year’s worth of interest on the amount withdrawn, when the CD reached maturity, how much less money did Orlando earn total than if he had not made his early withdrawal?

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.

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

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.

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