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FDIC Learning Bank Carmen Centshow

We know that banks have money but how do they work. How does a bank pay their bills? Look below and discover how!

How Does A Bank Make Money?

Bank Teller circa 1940 - source: Library of CongressWhen a bank lends money, it charges interest on the borrowed money. To remain in business, a bank must earn enough interest income to cover the interest payments to depositors as well as its other expenses (such as employee salaries, equipment, rent, etc.). To do this, banks charge a higher interest rate on money it lends to borrowers than it pays out on money deposited by savers. This is how a bank makes money.


Last Updated 1/2/2014 learning@fdic.gov