0
How can banks afford to pay interest n their customers savings account deposits?
Wiki User
∙ 10y ago
Because they're loaning the money in those deposits at double or more the interest rates that they're paying the depositors.
Wiki User
∙ 10y ago
Add your answer:
Earn +20 pts
How can banks afford to pay interest on their customers savings account deposits?
The bank does not just hold on to the money you retain in your savings account. Instead, they offer loans to other customers using that money. The loan customers pay an interest to the bank and the bank in turns offers the savings account holders an interest. Since banks make money by lending our money, they offer us an interest.
Do all deposits gain interest?
Not all deposits gain interest. Deposits to a savings account in a bank usually earn interest. Security deposits sometimes earn interest depending on where you reside. Deposits into investments will earn interest and the rate depends on the state of the economy and the financial markets.
What is a banks customer's share of the profit made on loans?
The bank customer's share of profit made on loans by the bank is called the "interest." It is the money the bank pays the customer for having their money deposited with the bank. As you know, the bank earns an interest income from loan customers for the money they lend them, and since this money they lend is taken from the deposits placed by customers, banks share the profit by paying interest to the customer who has placed the deposit with them.
How does money grow in a savings account?
A savings account is one in which customers save their monthly savings and they are not like the current account. Though the money is available at any time for the customer to withdraw, money is not as frequently deposited/withdrawn from it like the current account. Hence banks offer a meager interest rate for the money held in this account. Money grows in a savings account because: a. The account holder usually makes small deposits regularly into the account b. The money in the account earns a small interest and hence keeps growing in value
What is a compound interest savings account?
Its where your savings account earns interest on the interest.
How can banks afford to pay interest on their customers savings account deposits?
The bank does not just hold on to the money you retain in your savings account. Instead, they offer loans to other customers using that money. The loan customers pay an interest to the bank and the bank in turns offers the savings account holders an interest. Since banks make money by lending our money, they offer us an interest.
How banks afford to pay interest on their customers' savings account deposits?
They loan out the money in their customers' accounts and charge a higher interest rate on the loans.
What is the Features of saving account?
Some features of a savings account include, the ability to draw interest, overdraft protection and the requirement for minimum deposits. Most banks offer savings deposits for their customers.
What banks pay to their savings account customers?
Interest
Do all deposits gain interest?
Not all deposits gain interest. Deposits to a savings account in a bank usually earn interest. Security deposits sometimes earn interest depending on where you reside. Deposits into investments will earn interest and the rate depends on the state of the economy and the financial markets.
What is a banks customer's share of the profit made on loans?
The bank customer's share of profit made on loans by the bank is called the "interest." It is the money the bank pays the customer for having their money deposited with the bank. As you know, the bank earns an interest income from loan customers for the money they lend them, and since this money they lend is taken from the deposits placed by customers, banks share the profit by paying interest to the customer who has placed the deposit with them.
How does money grow in a savings account?
A savings account is one in which customers save their monthly savings and they are not like the current account. Though the money is available at any time for the customer to withdraw, money is not as frequently deposited/withdrawn from it like the current account. Hence banks offer a meager interest rate for the money held in this account. Money grows in a savings account because: a. The account holder usually makes small deposits regularly into the account b. The money in the account earns a small interest and hence keeps growing in value
What is a compound interest savings account?
Its where your savings account earns interest on the interest.
What do banks do with some of the profits they make by loaning out the money in their customers' savings accounts?
Pay interest on deposits, use it for their operational expenditure, to pay salaries to its employees etc. Pay interest on savings accounts
How can i shift savings account to savings account plus?
You can easily do a fund transfer to a savings account plus with minimum initial placement Rp 1,000,000 and minimum core deposits Rp 100,000. It will help you earn tiered interest rates.
What if your savings account pays 5 simple interest. You opened your savings account with 200 and did not add any additional deposits. After 2 years your account balance is approximately?
For simple interest you get $10 a year total in the account for 2 years $220.The answer is arrived at by multiplying $200x1.05x1.05 (for compound interest).$200x1.05x1.05= $220.50
Has the RBI de-regulated Savings Account Interest rates?
Yes. banks can essentially set the rate of interest they choose to pay for money held in savings accounts to their customers
