Bank "A" is offering 2% interest and a $100 debit card on a newly opened savings account with a minimum balance of $1,000 for one year. Bank "B" is offering 5% interest and a $50 debit card on a newly opened savings account with a minimum balance of $1,000 for one year. Assuming you deposit $1,000, which has the better return (interest plus card value) FOR THE FIRST MONTH?

Question

Skyla Proctor

Business

26 April, 19:55

Bank "A" is offering 2% interest and a $100 debit card on a newly opened savings account with a minimum balance of $1,000 for one year. Bank "B" is offering 5% interest and a $50 debit card on a newly opened savings account with a minimum balance of $1,000 for one year. Assuming you deposit $1,000, which has the better return (interest plus card value) FOR THE FIRST MONTH?

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Answers (2)

Know the Answer?

Jasmin · Answer 1

The Answer is Bank A

Explanation:

Bank A is offering = (Card Value + interest on saving account i. e $100+1000*2%/12) = $101.667

Bank B is offering = (Card Value + interest on saving account i. e $50+1000*5%/12) = $54.1667

So the Answer is Bank A because the debit card value of Bank A is greater than Bank B. Therefore overall benefit and return is better of Bank A.

Bryce Kline · Answer 2

On the offer of Bank A, the total return (annual) for deposit holder

= 2%of 1000 + 100 = 120 dollar

On the offer of Bank B, the total return (annual) for deposit holder

= 5%of 1000 + 50 = 100 dollar

Hence the offer of bank A is better in terms of return.