Question 21

Transfer money from her savings account into her checking account

To resolve her outstanding checks totaling $500 while currently having only $400 in her checking account, the most cost-effective solution for Clarice is to transfer money from her savings account into her checking account. This action would allow her to cover the checks without incurring additional fees.

A) transfer money from her savings account into her checking account

This option is correct because transferring funds from her savings account to her checking account directly addresses the shortfall in her checking balance, allowing her to cover the outstanding checks without incurring any additional fees or penalties.

B) let the bank cover the difference and incur insufficient-fund charges

This option is incorrect as it would result in insufficient-fund charges, which can be costly. Allowing the bank to cover the difference does not solve the problem effectively and would lead to additional financial burdens.

C) withdraw $100 from her checking account and then redeposit it immediately into her savings account

This option is incorrect because withdrawing $100 from her checking account only exacerbates her financial shortfall. It would not solve her problem of needing $500 to cover her outstanding checks.

D) take a cash advance on her credit card and deposit the funds into her checking account

This option is incorrect as taking a cash advance typically incurs high-interest rates and fees, making it a more expensive solution than transferring funds from her savings account.

Conclusion

In summary, transferring money from her savings account into her checking account is the most practical and least-cost solution for Clarice, enabling her to cover her checks without incurring any additional fees. All other options either lead to unnecessary charges or fail to resolve the shortfall effectively.