Question

Banks are money making machines and a vital part of our consumer driven economy.

How do banks make money from your deposits?

MUST BE A PARAGRAPH

Answer 1

Banks generally make money by borrowing money from depositors and compensating them with a certain interest rate. The banks will lend the money out to borrowers, charging the borrowers a higher interest rate, and profiting off the interest rate spread.

Answer 2

Banking is one of the most highly profitable industries in the world. There are several ways that banks will use your deposits to generate revenue. The first and most obvious would be lending your deposited funds to businesses/individuals for loans then using the interest rates to profit off of the borrower using your funds to generate to capital to provide the loan. The second way that banks make money from deposits comes from savings accounts where they will take funds from the account (but show the same balance) and use the funds to invest in the stock market. Because of this and the Great Depression every individual is insured up to 250,000 from the FDIC.

Step-by-step explanation:

I work at a bank