How do banks make money from their customers?

Answer 1

Banks make money from their customers in several ways, including:
1. Interest on loans: Banks earn money by charging interest on the loans they offer to customers. This interest can be fixed or adjustable and is usually calculated based on the borrower's credit score, income, and other factors.

2. Fees: Banks charge fees for various services, such as ATM withdrawals, wire transfers, overdrafts, and account maintenance. These fees generate revenue for the bank.

3. Investments: Banks use the money deposited by customers to invest in various securities, such as stocks and bonds, to earn returns.

4. Credit cards: Banks earn money from credit card transactions by charging merchants a percentage of each transaction.

5. Interbank lending: Banks lend money to each other at interest rates, which generates revenue for both parties.

Overall, banks make money by lending funds and charging interest, providing fee-based services, and making investments with customer deposits.