Why do we recieve interest on our bank accounts?

Answer 1

When you deposit money in a bank you are contributing to the amount of money they are able to lend out. Essentially, you are giving the bank the ability to lend out your money -- this is one of the reasons why banks are federally insured: if anything should go wrong you will not lose money.

Banks pay you interest as a sort of dividend on the money they have lent out for you. I suppose it sort of makes you a shareholder in their corperation...therefore, savings accounts typically have higher interest rates than checking accounts -- you are much more likely to withdraw and keep a low balence in your checking account than your savings account.

Answer 2

We recieve interest on our bank accounts because it is the banks way of competing for your business. Basically certain banks offer higher rates for intrest so you will keep your money in their facilities. The bank then uses your money to make out cash loans and make money off late fees. Thats pretty much the basic to it all.

Answer 3

so you know that your getting money instead of just losing it and it will keep you putting more money in their bank and keep it there for a long time so you can recieve that interest, the more money you put in their bank the more they have to give out loans and stuff

Answer 4

The banks use the money we deposit to loan to other people and they make a fortune doing it. The pittance they pay us for interest is an embarrassment to all of us. Canadian banks posted 19 billion dollars in profits last year.

Answer 5

cause you are giving your money to the bank so they can invest it. they make a profit from that and are willing to give you a small amount back.

banks don't just put money in vaults and let it sit. if everyone went to the bank tomorrow and asked for all their money, we'd instantly see a recession as there isn't enough cash in the world. not even 20% of the people would get their actual cash in hand.

a bank is a business, they are there to make money like any other business.

Answer 6

The bank has investment opportunities which you probably are not privy too....kinda like insider trading or money changing, but they are bigger because many small fries like you and I put our money into them and they make money off your money so they can be richer. Somebody has to do it. So they entice your money so they can make more money. We are all helping each other by the bank having money to lend to each other too. But make no mistake, the banks make a profit....its a business.

Answer 7

because ur money doenst just sit at the bank it is being worked by the bank to make money and you get a little tiny bit of it.

Answer 8

Because the bank is really using you money for loans and such and so it gives you a bit of money for supporting them. You get a tiny bit of the intrest they are collecting.

Answer 9

So we'll be willing to keep our money where the interest is higher.
It's a competition between banks.

Answer 10

they should pay interest they,re using your money you put in the bank dont you think you deserve that for use of your money.