You are 18 years old, opening your first savings account, and are considering three options: BANK A is not FDIC insured, has an interest rate of 5%, and a minimum deposit of $25. BANK B is FDIC insured, has an interest rate of 0.01%, and a minimum deposit of $50. Bank C is FDIC insured, has an interest rate of 0.02%, and a minimum deposit of $10,000. All three have fees competitive with other banks. Which bank is the best option

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Aries

25 November, 13:48

You are 18 years old, opening your first savings account, and are considering three options: BANK A is not FDIC insured, has an interest rate of 5%, and a minimum deposit of $25. BANK B is FDIC insured, has an interest rate of 0.01%, and a minimum deposit of $50. Bank C is FDIC insured, has an interest rate of 0.02%, and a minimum deposit of $10,000. All three have fees competitive with other banks. Which bank is the best option

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Porter Ramirez · Answer 1

Bank "B"

Explanation:

Bank A is not secured under FDIC, so do not choose bank A.

Bank C is fully secured under FDIC rules but has a huge minimum deposit of $10,000, if we deposit money in this bank, we will have lost our opportunity cost to invest this money and get the benefit.

Bank B is also fully secured under FDIC and has a low minimum deposit of $50, So bank "B" will be chosen.