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The highest rate that they can get away with. There are legal limits, and if they charge too much, no one will do business with them.

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17y ago

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How does the Fed influence banks to lower the interest rate they charge for lending money?

The Fed influences banks to lower the interest rate they charge for lending money by adjusting the federal funds rate, which is the interest rate at which banks lend to each other. When the Fed lowers the federal funds rate, it becomes cheaper for banks to borrow money, leading them to lower the interest rates they charge for lending to customers.


Which term refers to the percentage rate the lending institution charge for the use of its money?

interest rate


Why do bank still charges interest on loan?

Because, charging interest is one of the main sources of income for banks. Since you are borrowing money from the bank, it is the banks right to charge you an interest for lending you that money. Since they are giving you the money for your use, you are bound to pay them an interest for getting money from them.


When banks borrow money from each other?

Banks usually borrow money from one another when they are running short of cash. They charge a smaller interest (when compared to what interest gets charged to a normal loan customer) when they lend money to other banks. This lending interest rate is called Inter-Bank Lending Rate. Banks even go to the central bank of their country to borrow money if they need it.


Why do banks give interest on deposit?

Banks make money by lending money to people and charging people for borrowing. The amount banks charge is called interest. Banks borrow money from other people and pay them interest on the amount borrowed. Banks charge more interest on the money they lend than they pay one the money they borrow. That is how they make money. When people deposit money with a bank, the bank is literally borrowing money from some people so they can lend it to other people. That is why banks pay interest.

Related Questions

How does the Fed influence banks to lower the interest rate they charge for lending money?

The Fed influences banks to lower the interest rate they charge for lending money by adjusting the federal funds rate, which is the interest rate at which banks lend to each other. When the Fed lowers the federal funds rate, it becomes cheaper for banks to borrow money, leading them to lower the interest rates they charge for lending to customers.


What is the definition of interest in math terms?

The charge for borrowing something (money) or the return for lending it


Which term refers to the percentage rate the lending institution charge for the use of its money?

interest rate


What is the practice of lending money for interest?

the practice of lending money is the practice of your moms vagina


Why do bank still charges interest on loan?

Because, charging interest is one of the main sources of income for banks. Since you are borrowing money from the bank, it is the banks right to charge you an interest for lending you that money. Since they are giving you the money for your use, you are bound to pay them an interest for getting money from them.


What causes the debt to increase each day?

People or organisations lending money will generally charge interest until the loan is repaid. The interest is added to the debt, causing it to increase.


When did the christians start lending money with interest?

NEVER


What is the fee for lending money called?

The fee for lending money can refer to each of these: 1. Points. This is a term often used in mortgage lending. 2. Interest. This is most used for the cost of an unpaid loan.


When banks borrow money from each other?

Banks usually borrow money from one another when they are running short of cash. They charge a smaller interest (when compared to what interest gets charged to a normal loan customer) when they lend money to other banks. This lending interest rate is called Inter-Bank Lending Rate. Banks even go to the central bank of their country to borrow money if they need it.


What is the practice of lending money with iniquitous rates?

The practice of lending money, with interest rates "above the lawful rate", is called usury.


Why do banks give interest on deposit?

Banks make money by lending money to people and charging people for borrowing. The amount banks charge is called interest. Banks borrow money from other people and pay them interest on the amount borrowed. Banks charge more interest on the money they lend than they pay one the money they borrow. That is how they make money. When people deposit money with a bank, the bank is literally borrowing money from some people so they can lend it to other people. That is why banks pay interest.


What is the practice of lending money for interest known as?

The practice of lending money for interest is known as usury. This involves charging a fee for the use of borrowed money, typically expressed as a percentage over a period of time.