Faye’s bank charges her a $2.25 service fee every time she uses an out-of-network ATM. If Faye uses an out-of-network ATM twice a week, how much money does she pay in service fees every year?
The correct answer and explanation is:
Correct Answer: $234.00
Explanation (300 words)
Faye is charged a $2.25 service fee every time she uses an out-of-network ATM. According to the problem, she uses such an ATM twice a week.
To calculate how much she pays per week: 2 uses/week×$2.25/use=$4.50/week2 \text{ uses/week} \times \$2.25/\text{use} = \$4.50/\text{week}
Now, there are 52 weeks in a year. To find out how much she pays in a year, multiply the weekly cost by the number of weeks in a year: $4.50/week×52 weeks/year=$234.00/year\$4.50/\text{week} \times 52 \text{ weeks/year} = \$234.00/\text{year}
So, Faye pays $234.00 every year in service fees for using out-of-network ATMs.
Why this matters
Small fees that occur frequently can add up to a large yearly cost, often without the person realizing it. Faye might think that $2.25 isn’t much, but using an out-of-network ATM twice a week for an entire year quietly drains $234 from her account.
This scenario shows the importance of:
- Budget awareness: Tracking even small expenses.
- Smart banking choices: Finding ways to avoid unnecessary fees, such as using only in-network ATMs or switching to a bank that reimburses ATM fees.
Tip
If Faye switched to using in-network ATMs or withdrew more money less often, she could potentially save $234 annually — enough to cover a utility bill, groceries, or a savings goal.
In conclusion, small, regular expenses like ATM fees can add up over time. Faye pays $234.00 a year, and being aware of this can help her make more cost-effective decisions.