Banks make money by earning interest on loans they make to borrowers and by charging fees for various services they provide.
One way banks make money is by lending money to borrowers at a higher interest rate than they pay on deposits.
For example, if a bank offers a 5% interest rate on savings accounts and charges a 7% interest rate on loans, it will make a profit on the difference between the two rates.
Banks also make money by charging fees for various services they provide, such as:
Account fees: Banks may charge fees for maintaining accounts, such as checking or savings accounts, or for certain types of transactions, such as cash deposits or withdrawals.
Credit Card fees: Banks may charge fees for issuing credit cards, such as annual fees or fees for exceeding credit limits.
Loan fees: Banks may charge fees for processing loans, such as origination fees or application fees.
Investment fees: Banks may charge fees for managing investments or providing financial advice.
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