why do money banks want money from you for loans when the money they give to you is not even in their vault ?
In: Economics
Financial institutions need a certain amount of money in checking accounts in order for them to be able to lend out money (be in credit cards, mortgage, car notes, etc). This law was put in place in order to protect consumers in case they need to take out cash from their accounts to ensure the bank would have enough cash for those people. Basically banks can’t lend out all the money they have from their customers in case they want their money.
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