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
Op, I think you have gotten some pretty great answers from other users, however, I’d like to ask you a question. And I swear I’m not trolling or having a go at you.
Did they not explain this to you in school? Did you forget? Are you still very, very young?..
Banks make money by using the money that others deposit with the bank (it’s more complicated than that, but that’s the ELI5 gist). If no one puts their money in a bank, the bank has no money to use to make itself money.
Let’s say there are 2 banks in town. One pays no interest to depositors, while the other pays 5% interest. Which one are you depositing your money with? That’s the only reason banks pay interest – to entice you and others to deposit their money with them.
It’s pretty simple. They give you 3% so you “keep” your money there in the bank. They take that money give it to someone as a mortgage and ask for 6%.
Latest Answers