2007-03-20 21:10:13 · 14 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Banks make money by investing the depositors money. Banks accepts deposit from investors and give the interest to them as per the prevailing rate of interest. The amount in term deposit remains with bank for a fixed period as agreed between the bank and the depositer. The banks provides loans to business, for housing, for education, for marriages, personal loan and for many other reasons and they charge interest on that amount. This interest is usually higher than the interest they gave to depositors on fixed deposits. One more aspect of earning these days is the charges for different services they provide to the customers like ATM, debit card, personalise cheque books, overdraft facility, even issuing of net banking cheque books etc. The basic funda of making money by banks is "Accept money on lower rate and lend it on higher rate".
2007-03-20 21:26:56 · answer #1 · answered by pkg206 1 · 1⤊ 1⤋
Here are the different ways they make profits
1) You put in money in the bank, then
2) Your money is lend out to people looking for a loan, so they charge whatever interest rate on the loan. You get 1% interest on your savings while the bank keeps the difference AND/OR
3) Your money is invested in the stock market. Banks get an average rate of return of 12% on the investment, you get 1%.
4) Banks make money by charging ridiculous fees for anyone who overdrafts the checking account
5) They make money by charging monthly service fees if your account is below a certain minimum.
6) They make money by charging ATM fees.
When the last time you heard of a bank going bankrupt?
2007-03-21 13:37:14 · answer #2 · answered by Anonymous · 2⤊ 0⤋
banks make money by using the "spread", the difference between the rates for loans and mortgages and the rates for paying interests to their depositors. and also for all the fees they charge. the atm fees alone net banks almost $5 billion dollars a year. easy money.
2007-03-21 05:49:14 · answer #3 · answered by the_quiet_storm2 3 · 0⤊ 0⤋
They provide loans for people. Banks also create invisible money such as ATM card. You know you have it but, you don't have it in cash. They keep a portion of what people put in banks, and the rest they give out to loans. Everything works together. Money is "created" though interest rates.
2007-03-21 04:21:53 · answer #4 · answered by KOTEHOK 3 · 0⤊ 1⤋
banks make money by charging fees to members such as account keeping fees,account levy fees,monthly transaction fees ,interest on loans and credit cards,insurance products etc.
sure the charges don't look all that much but when you multiply these fees by the amount of members with the bank, your looking at some pretty serious money.
2007-03-21 04:30:26 · answer #5 · answered by Anonymous · 0⤊ 1⤋
They make interest and profit on the money their customers deposit.
They also make money on fees and interest from loans, credit cards and mortgages.
ST
2007-03-21 06:08:31 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Banks make money by lending monies and other bank-related services such as interbank transfers, deposits, drafts, etc...
2007-03-21 04:39:31 · answer #7 · answered by SGElite 7 · 0⤊ 1⤋
Thru overdraft fees, check services, loans (they make money of the interest they charge you), lots of different ways.
2007-03-21 04:13:16 · answer #8 · answered by lyllyan 6 · 1⤊ 1⤋
Many ways. Fees, investments, interest on loans paid back to them, certain accounts that they hold.
2007-03-26 09:44:58 · answer #9 · answered by Pepper 6 · 0⤊ 0⤋
By taking overdrafts, huge rate of interests on various kind of loans, taking charges on locker facilities etc.
2007-03-21 04:19:32 · answer #10 · answered by pradeep r 1 · 0⤊ 1⤋