Randy, a student, has $500 to deposit in a new checking account, but Randy knows he will not be able to maintain a minimum balance. He will not use an ATM card but will write a large number of checks. Randy is trying to choose between the unlimited check writing offered by South Trust and the low per-check fee offered by Sun Coast. How many checks would Randy have to write each month for the account at South Trust to be the better option?

Based on the information available, Randy should go with South Trust since South Trust doesn’t charge a fee per check. If Randy finds out that South Trust charges a fee for not maintaining a minimum balance that’s higher than the fee that Sun Coast will charge for the amount of checks he will write over a given statement cycle, then Randy should go with Sun Coast.

Expert Answers

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Based on the information available, South Trust is already the better option for Randy. It doesn’t matter how many checks Randy does or doesn’t write per his bank’s statement cycle. South Trust doesn’t charge any fee per check. Sun Coast does charge a fee per a check. Taking into consideration no other specific information, Randy should go with the bank that doesn’t charge a fee.

Yet if Randy acquired more information about these two banks, then the situation could change. For example, Randy might discover that South Trust, while it doesn’t charge a fee for writing a check, does charge a fee for not maintaining a certain amount of money in a checking account. Perhaps after conducting further research, Randy discovers that Sun Coast, while it does charge a “low” fee per check, doesn't charge customers a fee for falling below a certain number in their checking account.

If this information comes to light, then Sun Coast could become the better option. Say that Randy writes fifteen checks per month, and Sun Coast attaches a dollar fee to each check. Now, say that South Trust charges customers $20 every time their checking account statement cycle drops below a certain minimum. Since Randy can’t maintain the minimum, he will be charged $20 a month if he opens an account with South Trust. In this scenario, Randy should go with Sun Coast.

Although, if Sun Coast charges a fee for failing to maintain a minimum, then Randy might have to change his mind again. Really, Randy should find out more exact information about the fees for going below a minimum balance before he opens a checking account with either South Trust or Sun Coast.

Last Updated by eNotes Editorial on February 16, 2021
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