How Do Banks Work And Make Money?
We mostly choose banks when we need to save our money in a protected environment. It is the best place to keep our money safe and take whenever we want, even with profit. Many of you people must be having this question in mind that How Do Banks Work And Make Money? Let's discuss about the working process of banks and their money making source. Scroll down!
How Do Banks Works?
We do trust on banks that they will protect our money more than ourselves. We admit that banks are the best source of keeping your money safe rather than keeping it in your 'cupboard', and we can take our money from the bank whenever we want it, through a Cheque or ATM card. The base of bank's working is our trust that we deposit our money for savings in a protected environment and they lend your money to someone else, expecting it to be returned and the bank can make money from it. This whole process is managed by the bank itself.
How Do Banks Make Money?
Banks are not different than other businesses. They make money by selling 'money' through loans, Certificates of Deposit and other additional services that they offer to their customers. They mainly make money from interest rate that they take from loans which could be higher than the interest rate that they pay on depositor's accounts. Giving a loan is much riskier for a bank, because they never know if they'll get that money back. So, that's why mostly the bank charges higher interest rate. Banks also take tax charges for using ATM service. Banks also make money through investments.
This is how banks work and make money!
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