Free checking is now everywhere - how are banks making any money without charging customers a monthly fee?

Answer 1

Banks charge lots of fees, just not a fee for having a checking account with them.

Answer 2

Loans, my friend! Loans loans loans! Interest is a mighty wonderful thing. The interest they pay out to savings accounts and CD's is a fraction of what they're getting in on their side. And when I say loans I'm not talking about the peanut butter and jelly loans you might get to buy a car or some junk... I'm talking everything from fixed-rate mortgages to massive large business development loans, expansion options, swaps, etc. That's where banks make their dough... and PLENTY of it!! Average joes only see the personal banking side of their operation, which is quite literally nothing. All the little fines and fees and credit cards add up to a moderate chunk over a few million customers, but it is their interactions with big business, government, and real estate that generate the majority of their revenues. Just yesterday I worked on a $1.3 billion dollar government bond financing deal for a state economic development initiative, and Chase Bank is issuing the bond. Do you know how much interest they will make on that over the next 30 years?!?!

Banks are doing quite well!

That is how business and government work... it's a little trade secret. If Donald Trump wants to build some 80-story megatower downtown, he doesn't reach into his back pocket and pull out $80M, even if he could! He borrows the money from a financial institution (the folks who own the banks) and borrows the money with the assumption that he will make a large return on his investment to greatly offset the principal and interest payments he makes down the road.

Certainly business start-ups don't have the money in their back pockets. Banks are, directly and indirectly, behind every storefront, every business, every big government building, every major highway... you name it! Even the keyboard you're typing on was probably manufactured using some business loans. You need to do nothing more than look around you to see where banks make their dough!

And all of their money got there in the first place by we the people giving it to them to hold on to! Seems strange, but it works!

Answer 3

Are you kidding? Banks make money off of business loans. There was a time when there were no ATM fees, check fee, fee this fee that. Banks started doing that to milk everyone to increase the bottom line. Now they must revert back to compete in todays markets.

Answer 4

Trust me - they're making money. Either directly from the checking account. Most free checking accounts require a minimum balance and the bank can turn around and lend that money out at maybe 8% interest. Also, processing checks and the like has gotten really cheap with computerization, so they aren't spending much money to give you that service.

Also, they expect to sell other products to many of their free checking customers. Eventually most people will use other services (loans, etc.) and will typically use the bank they already work with.

Answer 5

They have loaned out the money in your checking account to someone else at a rate of interest. They are not paying you any interest on that money and they are probably making at least 6 to 9% on it.

Also, they know that a certain percentage of account holders will overdraft their accounts and run afoul of other accountholder rules. When these things happen, they charge a fee.

Answer 6

Banks make most of their money on the interest from loans and credit cards. They give you free checking but offer you a credit card where they can make tons more money than they ever could have for your checking account.

Answer 7

Your mortgage, home equity loan, credit card, overdraft fee, brokerage fee, interest earn on international money, commercial loans, do not worry about bank, they know how to get your money in one way or the other
citibank last year profit about 16 billions with a B
bank of america make profit 8 billion with a B

do not worry about them
take care of yourself first

Answer 8

maintenance value is only yet another observe for the economic enterprise charging you a value for containing you cash for you until eventually you like it. In years long previous via, banks made money from interest on loans. They paid you to grant them you cash to private loan out. at present maximum of banks income is from merchandising economic units to and fro and in investments. They now not desire you cash to make money so as that they value you to hold you cash until eventually you like it.

Answer 9

They are getting their money somehow in another way. But I sure am not complaining about my free checking I love it

Answer 10

Buying more checks, late fees, fees for mortgages, etc...