Learn how banks work and make money. Read this report now to get the real truth:
Banks are businesses and must make profit like any other business. Many people (mostly poor) associate this activity with something bad. The truth is that we need banks and they need us. Banks need to thrive and if not, our economy would be in a really bad state. Yes these are financially difficult times already, but it would be much worse if banks suffered.
Here are 5 ways to make money:
We offer loans and make money in the form of interest. There is always risk involved and this is no exception. They charge higher interest rates on loans involving a higher risk and charge low interest rates on loans that involve less risk. The amount that is charged with interest in typical cases it depends on how many people want to borrow and how much they can afford to give.
Most banks offer their customers about the 4% interest on the amount of money that they have deposited in their savings accounts. In turn offer someone who wants a loan at say 7% as an example. They make their profit from the difference of 7% (-4%) 3%. These figures are used as examples only and the system they use is not so cut and dry. This is just to give you an idea of how it’s made money on savings accounts.
Some banks will also use the savings to invest in other things like Forex trading, hedge funds and pension funds management.
Loan application fees
Account maintenance charges
Bank machine costs
Card transaction fees
Teller transaction costs
Insufficient funds fees
4 investment opportunities:
Banks also make money by offering customers, stocks, bonds and other securities that they can invest their money in.
Banks play an important role in our lives. We lend money to buy our homes and cars. Imagine having to save money to buy a House? Many of us wouldn’t be able to handle this until maybe after retirement.
Rory Singh is an Internet entrepreneur and investor.
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