how do banks make money?

Answer 1

In the early days when there was only a few major banks, it was from the interest.

Your banking with everyone else, would go out on loans, the loans would accrue interest.

These days it seems anything that is done as a result of servicing any client, and I am writing generally as a person with a normal account, there is a charge.

No longer are they privileged to have you as a client, somehow now the shoe has changed feet, the client is now the privileged of being allowed to have an account with X bank.

The fore mention still happens, but also add sundries, such; cost for printing checks, monthly services charges to account if they fall under the banking activity cap. One example would be, if you banked $1,000 and left it there to accrue interest, the service charges per month would eat at your saving, and by the end of the year you would have $0 in your savings account.

This I don't particularly understand, as to bank is to save, while at the same time they use your saving combined with all other savings and put them out as investments to stock and bonds, or loans, which they accrue profit interest, at your cost.

One does know, if you continue to build on your savings, then you won't actually miss the $25 here and there in what I call parking meter charges.

Every penny counts.

This is my experience and Knowledge, I hope that helps some.

Thanks it was a good question.

Answer 2

The bank uses your money to make more money. You are loaning your money to the bank when you save your money. The bank gives you interest for using your money. Many people get loans from the bank.

If they want to buy something, like a house, a car, or to pay for college, they tell the bank what they want to buy, and the bank gives them the sum of money they need. But, it's not yours to keep when you borrow money from the bank. You have to pay back the money you borrow, plus interest. The interest rate is a little higher than the interest rate you get when you make a deposit. So, if you get a 6% interest rate when you make a deposit in your savings account, the person who borrowed the money has to pay 10% interest. The extra 4% interest is how banks make money.

Answer 3

I don't claim to know the complexities of banking but they certainly weren't conjured up in a forum titled PHILOSOPHY! Maybe the answer you seek can be found in one of these SELECTIONS!!!

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Answer 4

banks take money as deposits and give , lets say 10% interest, now they will loan mony to someone else at 12%, so they make a profit of 2 %.

Answer 5

Hok is correct, interest spreads is one way they earn money.

They also charge fees for all kinds of services. Lending fees for example for mortgages. They also charge for ATMs, overdrafts, etc.

And banks make investments with your money to a limited extent.

Answer 6

By stealing it from the ones that have "FREE" checking. There are far to many hidden fees and that is how they make their money.

Answer 7

Most of them make money the old-fashioned way. They steal it ☺

Doug

Answer 8

by investing the money.

Answer 9

loans and interests. or they use magic. lol

Answer 10

overdraft fees! lol