Question

Dwayne had a balance of $95.13 in his checking account on Monday morning. That day he used his debit card for the following transactions:
Breakfast at the corner bagel shop: $8.53
Gas in the car: $28.60
Cable bill: $65.39
Oil change: $30.64
Dwayne's bank uses a balance system of debiting from highest to lowest. The bank will not return amounts up to a total of $50 in overdrafts, but they do charge a fee for each overdraft. How many overdraft fees will Dwayne incur?
a.
1
b.
2
c.
3
d.
4

Answer 1

Order the debits from highest to lowest: 65.39, 30.64, 28.60, 8.53.

Start with $95.13:
- After $65.39 → $29.74 (no overdraft)
- After $30.64 → $29.74 − $30.64 = −$0.90 (1st overdraft)
- After $28.60 → −$0.90 − $28.60 = −$29.50 (2nd overdraft)
- After $8.53 → −$29.50 − $8.53 = −$38.03 (3rd overdraft)

The negative balance never exceeds the $50 overdraft allowance, so three overdraft fees are charged.

Answer: c. 3