Question

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?

Answer 1

The Answer is Bank A

Step-by-step 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.

Answer 2

Step-by-step explanation:

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.