How banks work. Bank Information

Many people check bank accounts. As savings account to open. Watching or even just borrowing. However many people here do not understand the big picture of the bank and here. In today’s post, we are going to be absolutely fine. What is a bank and we children to understand it? Let’s go over the steps to find out what the function is and why the bank exists. If it sounds good then make sure and remember that you can always find this content and even more so the first thing you have to keep in mind. What is needed is that a bank is like any other business, its purpose is to make money, and the way the bank makes money

They just want to keep this in mind by moving money around you because we go to some of the services that a bank offers the first service that we are going from a bank to savings account at first glance a savings account only one It is a place where people can go and deposit some money and withdraw money whenever they want. It is also a place where they can earn some kind of interest on the funds that they actually deposit and this Considering how long these funds have been deposited, however, what actually happens is that a savings account is very much like a loan unless you are a lender.

How banks work. Bank Information

And the bank is less kneeling. And really form any kind of traditional debt. About which there is no big difference. You must be thinking The difference is that it is extremely flexible. You can deposit as much money as you want in the savings account. And whenever you see this flexibility. The loan actually pays you a very low-interest rate. The other service people are familiar with is checking the bank. Checking the account in its main part. The account works just like a savings account where you have a bank account. They are putting money inside and then the bank is taking this money as a loan

However, instead of paying you interest for this amount, a bank may actually offer you some services such as checks that you write and make sure they pass through the third type of service. Know that you only have to take a loan from a bank but in that case, the bank is the lender and you are the one who actually takes money for a big purchase for example if you need a loan to buy an automobile or even The question now is how to fix money for beginners through a checking account or a savings account whatever the bank deposits in your bank.

How banks work. Bank Information

So the bank actually gets some kind of refund from it and because they give you the interest rate for this savings account because they are giving you a part of the return that they get so many dollars. Which you put inside the bank. For example, they say that you have found a bank with a savings account with an interest rate of 1.5% which the bank does with your money and another group of savings accounts is that they actually take the money out and invest in it, for example. The so-called treasury note is guaranteed by the federal government

And offers a 5% return. Another example is when an individual goes to a bank and says I need a loan for a car. Going to the bank where this money is received will take money from your savings account and maybe from someone else’s savings account and they will lend this money to the borrower. When the borrower comes back and pays the principal with any interest rate, the bank actually repays the 1.5 in your savings account that they borrow from you.

How banks work. Bank Information

And the bank gets to keep the extra 5. 5% now another hypothetical scenario is that a bank opens for business and two people want to open a savings account in the bank these two people want to deposit 10 each and 1.5% interest rate so now the bank Yesterday 20 now says that another character named Judy comes in and says that she wants to take 20 loans for one year. The one who is going to the bank is the 20 that she has now. Take it and lend it. At the end of the year, Judy will come back and pay off her ہزار 20,000 debt and seven percent interest, which is equivalent to fourteen hundred dollars.

And let’s say it. People who actually opened a savings account. They come and clear their accounts. This is all they have now. In addition to their ten thousand dollars each. One point five percent interest rate of one hundred and fifty dollars. Overall so that will extract the equivalent of. But these two people who come in. Twenty thousand three hundred dollars will be withdrawn from their accounts. Then the bank will actually keep the rest. One thousand one hundred dollars now this scenario. An increase to a hundred times means that the original. I have two hundred savings accounts and one hundred cars. Loans are now at the end. At the end of the year, the bank will earn one million ten thousand dollars.

How banks work. Bank Information

When you start factoring in long term items like home loans or deposit certificates it is easy to see that the bank actually makes a lot of money on top that for example whenever you use the wrong ATM or Whenever an overdraft is secured, it makes a lot of money from the fees, even though the bank has to spend only a few cents. Borrowing people’s money and paying them a small amount for it besides this also actually works by lending this money to the people. Moves the whole process forward and keeps the difference as usual

If you have any questions about how your bank works, thank you very much for taking a look below and we will get back to you as soon as possible.

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