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Question
#64143. Vance9991
asks:
How do banks stay in business?
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Czolgolz
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By loaning out money at a higher interest rate than you acrue in your savings account. For instance, I paid over $700 US on my mortgage this month, and over $500 of that was for interest.
Apr 01 06, 9:06 AM
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Br.John
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They charge interest to people who want to borrow money for cars, home improvement, mortgages.
Apr 01 06, 9:41 AM
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BungeeAZ
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Banks also sell their loans. They will pool the loans and depending on the credit they can get more than dollar for dollar on each loan (i.e., sell the loan for 110%...meaning a 10% profit on the loan). So, they make a profit on the fees that they charge to make the loan and then receive even more money if or when they sell the loan, and they make money on the interest collected on the loans in their portfolio.
Certain accounts also have transaction fees attached to them. Some charge $2 per teller transaction. They also collect fees for safe-deposit box use.
They also make money based on investments that they make on the customer's behalf. And, the bank has it's own investments in it's corporate portfolio.
Apr 01 06, 10:44 PM
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