A bank is a place where anyone can go to keep their money safe as well as a place that will handle of your finances. A bank makes all its money from people making payments on their loans as well as paying the interest rates. Banks also make money by charging different fees for things like using the ATM, and charging a fee if you over draw your account. With all that being said how to do banks come up with money to give out loans. Well when someone deposits money into a bank they are allowing the bank to borrow it. The bank will pay interest to the person that they are borrowing from.
Services provided
Banks provide many different services to people. Most banks will offer loans as well as different account options. You have two main choices when it comes to using a bank. You will either be borrowing money or putting money into an account.
Saving your Money
Instead of keeping your money hidden in a cookie jar, you can take your money to a bank and put it in a savings account, which keeps your money secure and safe but it also allows you to collect interest in the money that you put into the account. All the money that you put into the savings account be insured by the federal government.
Services provided
Banks provide many different services to people. Most banks will offer loans as well as different account options. You have two main choices when it comes to using a bank. You will either be borrowing money or putting money into an account.
Saving your Money
Instead of keeping your money hidden in a cookie jar, you can take your money to a bank and put it in a savings account, which keeps your money secure and safe but it also allows you to collect interest in the money that you put into the account. All the money that you put into the savings account be insured by the federal government.
Investing your Money
A bank can help you invest your money so that you will not only be able to save it but you will also be able to make money off the interest. If you are just starting off then your best bet would be to put your money into a CD or a bond. With either one of these you will have to keep the money in the account for a certain period of time and you will earn a higher yearly interest rate. This is the safest option; you also have the option to invest in stocks or mutual funds. Both of these have huge risks and you could potentially lose your money.
Borrowing from the Bank
You can go to your bank and ask to borrow money. There are several different reasons why someone would want to borrow money. For example you might want to get a car loan or a home mortgage. If you meet the specific qualifications then you also have to pay an interest rate ever month when you make your payment. Your interest rate will depend on the qualifications for the loan.
A bank can help you invest your money so that you will not only be able to save it but you will also be able to make money off the interest. If you are just starting off then your best bet would be to put your money into a CD or a bond. With either one of these you will have to keep the money in the account for a certain period of time and you will earn a higher yearly interest rate. This is the safest option; you also have the option to invest in stocks or mutual funds. Both of these have huge risks and you could potentially lose your money.
Borrowing from the Bank
You can go to your bank and ask to borrow money. There are several different reasons why someone would want to borrow money. For example you might want to get a car loan or a home mortgage. If you meet the specific qualifications then you also have to pay an interest rate ever month when you make your payment. Your interest rate will depend on the qualifications for the loan.