How does a bank make its money?
(1 point)
It prints money.
It gets funded by the government.
It lends your money out at a higher interest rate than the one they are giving to you.
It doesn't make money, only passes it around.
1 answer
A bank primarily makes money by lending out the funds it holds on behalf of its customers. This process involves granting loans to individuals, businesses, and other entities, charging them interest on the borrowed amount. The interest charged on loans is higher than the interest paid on deposits or savings accounts, allowing the bank to generate a profit. Banks may also earn money through fees, such as account maintenance fees or transaction fees, and by investing in various financial markets. It is important to note that banks do not print money, nor do they receive direct funding from the government.
1 answer