Why do people put their money in banks?

Question

I honestly cannot understand why anyone would put their money into a for-profit financial institution. It's not like there isn't an alternative. Mutuals! In Australia credit unions and some of the building societies are mutuals (I assume most countries have their own equivelants). They make no profits. Why do people stay in the banks as the banks make billions of dollars profit per year? Most of that money is straight out of the pockets of their customers. Whereas the mutuals, all the "profit" goes straight back to members (customers) in the form of more services, lower fees, etc.

So why? Please help me understand.

Madre, I'm sorry to here that. I think it used to be like that here. But these days, for example anyone can use the Queensland Teachers' Credit Union, you don't have to be a teacher.

Jedi, not everything about capitalism is as great as you make out. Most of the world's problems are because of capitalism. Capitalism and communism have both failed, obviously it's time for something else.

In terms of losing your money if they go broke, I'm not sure that that is true in Australia either. I hope not. :-) But I'm willing to take my chances with Australia's largest (mutual) building society.

When I was with one of the big banks they were taking $5 in fees every month out of my account for it just sitting there. I ended up losing a lot more in fees than I ever earned in interest. Now I get no account keeping fees at all.

As for all those other services (like credit cards, ATMs, etc.), well I think (again, in Oz at least) most if not all mutuals offer them too.

Answer 1

I think in the beginning most people used banks for the safety and protection of their money, and for what little interest they offered. At the time banks were about the only well known option that allow easy access to your funds. However, now many other options exist that allows equal protection, and more opportunities for greater investment (interest, etc) GOOD QUESTION

Answer 2

Qtcu Internet Banking

Answer 3

In the US, the equivalent of mutuals are credit unions. I have accounts with both banks and credit unions. I will tend to establish whichever loan or depository relationship benefits me most, i.e., whichever gives me the best interest rate and/or services. Most people are like me, and are going to do whatever is the most self-serving.

It doesn't matter to me whether or not the institution makes a profit. However, just because an institution is non-profit does not necessarily mean it offers the best rates and/or services. If that were the case, then banks would promptly go out of business. Banks make a profit, but have to provide services on a competitive basis. Those that are successful find a way to do this.

Note: I'm a banker (I do construction loans), but yet I do not personally have any accounts with the bank I work for.

Answer 4

People who put money in a bank get interest - the bank PAYS them to keep their money there. Most of the bank's profit comes from interest on loans that the bank makes to its customers.

Answer 5

Banks generally do not make that much money on fees. They are more interested in getting your cash deposits and making a spread on your money. For example, every dollar you deposit, bank gives you $0.04 as a thank you, while the bank will lend your dollar to others and charge them $0.0825 for every dollar. Hence the spread is $0.0425 on every dollar bank lends. Plus the bank will use a creative way to package your cash and sell it as a derivative in the investment world and make more money.

Your assertion that banks make money is correct. How they make money is arguable. So why not join the gang and buy some shares of the banks you hate the most? That way, you can part-take in the profit.

Answer 6

BANKS have been around for 300 years!

Check out Encarta.com "BANKS"

Why? Do people deposit money into Banks and Credit Unions in the United States?

Because moeny is safer on deposit with an FDIC government insured institution such as a Bank of America, Wells Fargo, Wachovia, JP Morgan Chase, or US Bank among 9,500 other options NOT including Credit Unions which are NON-PROFIT organizations in the US.

Banks pay interest to depositors, banks of the safety and convenience that Consumers and Business Owners and Corporations trust.

Banks also offer investment services, personal trust services, and most of all Consumer, Business, Commercial and Corporate Credit (LOANS) to people to make purchases such as cars, real estate, businesses, homes, etc....

We DON'T want people to keep their MONE at home and in a mattress for example its NOT safe.

Ture Banks are for PROFIT but they offer many financial services and conveniences such as Credit Cards, Student Loans, Financing, Insurance, Ag Lending, Online Banking, ATMs, Gift Cards, Checks, Money Orders, Wire Transfer Services, Private Banking, International Banking Services, among many more products and services.

The USA was built on economic empowerment, and CAPITALISM.

Banks play a major role in corporate america, mergers and acquisitions, stocks, bonds, corporate financing, Wall Street, etc...

If a mutual goes out of business you loose your money??

If a Bank fails you get your MONEY from the Federal Government in the USA.

Hope this helps you understand our economic system.

More facts can be located at:

www.occ.gov

www.federalreserve.com

www.federalreserve.gov

www.fdic.gov


GOOD DAY MATE! :-)

Answer 7

It probably depends on the bank and state that you live in. Like here in Louisville, KY, you can place money into anyone's account as long as you know the account number. You are not however allowed to withdraw anything from another persons account. Good luck to you.

Answer 8

In the USA, most credit unions only offer their memberships to people involved with certain organizations or companies. Not everyone has affiliation with a company that provides membership.

Answer 9

a lot of people dont know other investment vehicles so just let the money in savings w/c is the lowest . mostly employees 9 to 5 no time to or busy in their job.

Answer 10

I spend less when I put it in the bank. It doesn't burn a hole in my pocket that way.