You opened a U.S. Banks standard savings account in January of this year with a 3% annual interest rate but there is a monthly maintenance fee of $4, which you can get waived if you keep a $300 minimum daily-balance. If you can only keep up a $250 minimum balance, are you making money or loosing money in the account?

Question

You opened a U.S. Banks standard savings account in January of this year with a 3% annual interest rate but there is a monthly maintenance fee of $4, which you can get waived if you keep a $300 minimum daily-balance. If you can only keep up a $250 minimum balance, are you making money or loosing money in the account?

Answer 1

To determine if you are making or losing money in the account, we need to compare the interest earned with the monthly maintenance fee.

Interest earned:
- Annual interest rate: 3%
- Monthly interest rate: 3% / 12 = 0.25%
- Interest earned on $250 minimum balance per month: $250 * 0.0025 = $0.625

Monthly maintenance fee: $4

Since the interest earned on a $250 minimum balance is less than the $4 monthly maintenance fee, you are losing money in the account.