If you have ever taken a loan from a bank then while repaying it back you even have to pay some interest charges as well. Even if the bank offers a guaranteed payday advances, it definitely takes back more than what you have borrowed from it. It is very natural for a person to wonder where exactly the money goes and also why to pay any charges for a bank service.
- Whenever any amount of money is deposited in the bank, a person allows the bank to use his money for making loans. So, your money is loaned out to some other people and in return it charges an interest rate. So when the money is collected by the bank, a small amount of this interest is added back to the customer’s account.
- Well, whatever services you avail from the bank it does cost money. Say for instance, all the banks provide physical, mobile, online banking services. To develop all these facilities and keeping up with the advanced technology, it does require a lot of finances. Also, not to forget the physical and cyber security that is required to keep your money safe.
- Nowadays, the debit cards come with pin and chip and whenever you make a transaction at some retailers, your bank has to pay a small amount to the company which on behalf of the retailer, accepts the card. In fact, if you ever withdraw cash from some other bank machines, then a small fee is paid by your back to the other bank. You get an option to use credit card which lets you borrow money from the bank without any necessity of paying back an interest fee.
- When your bank lends you a huge sum of money, it uses the amount that you deposit which is cheaper than borrowing any money from some other bank.