Clarice has ten checks outstanding totaling $500. She finds out that her checking account balance is $400. The least-cost solution to Clarice's problem is for her to
transfer money from her savings account into her checking account.
To resolve the issue of having insufficient funds to cover her outstanding checks, the most efficient choice for Clarice is to transfer money from her savings account to her checking account. This option allows her to meet her obligations without incurring additional fees or complications.
This option directly addresses Clarice's need to cover her outstanding checks without incurring any additional costs. By transferring the necessary $100 from her savings, she can ensure her checking account balance meets the total of her outstanding checks, allowing her to avoid any insufficient fund charges.
Opting for the bank to cover the difference would lead Clarice to face insufficient-fund charges, which can accumulate quickly and result in a more significant financial burden. This option does not solve her problem effectively; rather, it compounds her financial issues by introducing additional fees.
This choice does not resolve the problem, as withdrawing $100 from her checking account would further decrease her available funds to cover the checks. Additionally, redepositing it into her savings does nothing to help her meet her current obligations, making this option impractical.
Using a credit card for a cash advance typically incurs high-interest rates and fees, making it a costly method to resolve her issue. In contrast, transferring funds from her savings account would be a more economical and straightforward solution.
To efficiently resolve her insufficient funds issue, Clarice should transfer money from her savings account into her checking account. This action provides a direct and cost-effective means to meet her obligations without incurring additional fees or complications, unlike the other options that could complicate her financial situation further.
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