Question

If the interest rate on a savings account is 0.02%, approximately how much money do you need to keep in this account for 1 year to earn enough interest to cover a single $9.99 Below-Minimum-Balance Fee?

Answer 1

This problem reflects pretty much what consumers are dealing with every day!

Let P=minimum balance required to generate enough interest to pay for a 9.99 fee (probably monthly).

Annual Interest rate, i = 0.02%

Then, assuming annual compounding
9.99=P(0.0002)
P=9.99/0.0002=$49950

Answer: With a deposit of $49950 over one year, there will be $9.99 to pay for a single $9.99 "below-minimum-balance" fee.