It just seems like a semi necessary thing to have to use a bank, why do they pay me a % to keep money there?
In: 1333
They use the money for their own purposes, investments etc. Of course what this means is that at any given time, if all their customers rushed to the bank to withdraw their money they wouldn’t actually have all that money on hand.
Thus, they try to encourage people to keep their money in with incentives like interest. Also to a lesser degree it’s meant to somewhat compensate for inflation, but it’s not a primary reason because if it was then interest would follow inflation rates automatically.
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