2006-09-01 15:14:03 · 5 answers · asked by will_1120 1 in Business & Finance ➔ Personal Finance
They are able to have you invest your money for a higher rate of interest, and for a longer term, therefore they are able to invest, loans, etc. Most of them have a minimum deposit, and it is good for you if you have the money and the time of the CD. Most of the time, if you take your funds out early, you will have to pay a penalty, usually in the form of loss of interest for x amount of days. They have to have this information typed on the CD for you to read. Always ask questions before you invest!!!
2006-09-01 15:24:09 · answer #1 · answered by like2talk 2 · 0⤊ 0⤋
By opening a certificate of deposit, you agree to have a specific amounts of funds on deposit with the bank for a specified period of time. Therefore, the bank knows how much of your money they can play with for how long. Banks invest your funds while they are on deposit. If the bank has your funds for a specific length of time, then they can invest these funds, earning a higher return than you are paid for your CD.
2006-09-02 04:54:47 · answer #2 · answered by Freddie 3 · 0⤊ 0⤋
They take your money and promise to pay you about 4 or 5 percent then some guy goes into the car dealership and wants to buy a car so the bank lends the money to the car buyer at about 10 percent and then gets the money back slowly and repeats the process.
2006-09-01 22:22:37 · answer #3 · answered by Anonymous · 0⤊ 0⤋
They use your money to make loans or investments with a higher rate of return than they are paying you.
2006-09-01 22:21:39 · answer #4 · answered by Carole V 1 · 0⤊ 0⤋
because they earn more money than the interest that you earn
2006-09-01 22:20:57 · answer #5 · answered by mr. Bob 5 · 0⤊ 0⤋