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Whats in it for banks when you start a savings account? |
What benefit does a bank get from people putting Savings Accounts in their bank. I mean they reward you with interest, but why give you free money. whats in it for them? They lend your money out at a higher interest rate... That's why in the crash in 1929 there was a run at the bank... Many banks had to shut down... Watch "It's a Wonderful Life", at the beginning just as George was to go on his honeymoon, the savings and loan had almost all the people looking for their money. they get to use you money for investments While your money is in the bank they loan it to other people and collect higher interest than they are paying you. They get 6% and give You 2% . I think they win. When you start a savings account it is a high probablility that the money you deposit will stay in their bank over a longer period of time than a checking account. Banks need money for things like loans, so by putting your money into a savings account you are helping the bank to ensure that they have more money to lend to others, which than helps them gain money through intrest. For every dollar you put in a savings account, $0.90 is loaned out by the bank at a much higher interest rate that you're getting. In fact, to help back that up, Federal Regulation D prevents more than six withdrawals per statement cycle on a savings/money market account. That is why savings/money market/CD's interest rates you earn is just slightly less than what the overall prime rate is on loans you pay. i work for a bank |
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