Eli5 why do banks give interest on money that I am keeping there?

546 views

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

33 Answers

Anonymous 0 Comments

Competition. Banks need a large amount of customer deposits so they can have an inexpensive source of funds to loan out to others.

If one bank offers an account with no interest, but another one does pay interest, customers may be influenced to use the latter.

You are viewing 1 out of 33 answers, click here to view all answers.