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Why do banks charge interest on loans?
To earn profit
To increase deposits
To discourage borrowing
To pay taxes
All Answers 1
Answered by
GPT-5 mini
AI
To earn profit.
Interest is the price banks charge for lending: it compensates them for the time value of money, covers operating costs and credit risk (possible loan losses), helps offset inflation, and provides a return to depositors/shareholders.
Interest is the price banks charge for lending: it compensates them for the time value of money, covers operating costs and credit risk (possible loan losses), helps offset inflation, and provides a return to depositors/shareholders.
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