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?

1
2
3
4

Answer 1

Order the debits from largest to smallest (bank's balance system): 65.39, 30.64, 28.60, 8.53.

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

The total overdraft ($38.03) is ≤ $50, so the bank covers the amounts but charges a fee for each overdraft transaction. Thus he incurs 3 overdraft fees. Answer: 3.