How Banks Make Money

How does a bank make money? It’s not by keeping your cash safe. It’s by playing

a clever game of borrow and lend. Think of a bank as a giant money carousel. When

you put your money in (your deposit), you are letting the bank borrow it.

They promise to give it back, plus a little extra called interest. Now,

the bank takes most of that money and lends it out to other people who need to buy a house

or a car. This is called a loan. The trick is, the bank charges the borrower a higher

interest rate than they pay you. That difference in interest is how the bank makes its profit.

They are the middleman in the money carousel! Fun Fact: Banks are only required to keep a small