Business & Community

Different Ways Banks Earn Money

There are a number of ways in which the commercial banking system earns money for their daily operations. Many often look at a commercial bank as an institution that keeps our money for safekeeping, but it certainly is much more than that. The commercial bank of today provides a number of services to the individual that allows the institution to earn adequate sums to have a competent workforce, along with handling general costs. Although there are many functions of a commercial bank, there are a few which are common in all of them:

Loans

One of the primary functions of the bank is to provide money for a number of individuals that are in need of it. In other words, one of the best places to get quick money is through the loan system of the bank, albeit with some conditions imposed. Regardless of whether it is a small loan or large loan, they function in the same manner. Here, the bank gives you a certain amount of money for your particular needs. The bank, however, offers this with conditions of a repayment time period and interest.

Credit Cards

In the present day and age, plastic has become a substitute for paper money in the form of credit and debit cards. In the case of credit cards, the bank offers you a card that can be used at stores worldwide with a certain credit limit. This means that you do not necessarily need to have the money with you or in your account during the time of transaction. However, you will have to pay the debt within a stipulated time period, more often than not it is a month. Moreover, if you are to default or perform a late payment to the bank, the bank charges an interest rate. Other charges are also imposed, such as stamp duty and card fees.

Investment And Mortgage Facilities

This facility is similar to a loan, except that it is bigger and much riskier, due to the many uncertainties. Banks generally have the ability to be an assistant to you, should you be willing to invest in a certain venture. In order to mitigate the risks, the bank often performs an investment analysis, which allows the bank to predict if the investment will be a successful one or an unworthy one. Furthermore, this facility too is charged with interests and other fees.

Safety Lockers

Banks are also considered to be safes for valuable belongings for many individuals, be it deeds for jewellery, the bank has the ability to keep your belongings safely in a vault specially designed to negate any threat from the outside world. This, however, comes at a price, as the bank imposes a number of annual maintenance fees and other fees.

Banks then are just not only institutions that keep our money and belongings safe and earns meagre sum from it. They are also versatile financial institutions that assist many individuals get through financial situations that would be difficult if faced alone.

Please follow and like us:
error
Tags:

Leave a Reply

Your email address will not be published. Required fields are marked *

*