We all have our bank accounts in place, but certainly, very few of us wonder how banks usually earn. Banks are established businesses, and they put profit as their top priority. However, with free-of-cost services to their customers, the procedure by which financial establishments themselves make money sounds intriguing to many of us. Keeping our curious minds in view, let’s unveil the strategies by which banks make their income!
Interest On Debt
Banks issue loans to other customers using the money you deposited in your bank account. In turn, they offer a small percentage of that considerable interest costs to you as a liability for using your amount for business. However, the interest percentage banks reserve for themselves is pretty huge and earns them billions.
Fee For Account Maintenance
Banks charge a significant sum of money in the name of account maintenance fees each month. These substantial costs then add up to the earnings of the bank.
Mulct For Inactivity
Banks also earn by charging inactivity fees on dormant accounts that are not used often. However, this can be avoided by showing some activity on your account, like making a payment or withdrawing cash.
Overdraft Charges
Banks charge overdraft fees if you withdraw or spend more than your current account balance.
Withdrawal Costs
Banks pour money into their income by charging costs on each withdrawal you make which piles up to make enormous profits for the bank later. Avoid performing much activity with your account to save more and pay less as withdrawal fees.
Paper Statements Charges
Whenever you request the bank for paper statements, they charge you on them, while additional costs are charged on archived statements. Going paperless is the more budget-friendly alternative here.
Replacement Fees For Debit Cards
If your debit card gets stolen or lost, you have to incur the liability charges to get a new debit card issued-which is another strategy banks use to make income.
ATM charges
If you get stuck in a situation where you don’t have access to your bank’s ATM and have to use another bank’s network-your bank and the bank you use will both cost you for that. Many account holders commit this act quite often, which pushes added income towards the banks’ earnings.
Penalties On Bounced Check
If you issue someone a check that covers funds more than your account balance, your check will get bounced, and it will also cost you a penalty.
Costs For Minimum Balance
If your account balance falls below the minimum balance standards set by the bank, the bank will cost you a penalty fee for it. You can avoid it by keeping up on the minimum balance range by your bank and setting your balance accordingly.
You now know how banks make plenty of income even if they offer the perks of a free account to you. Do your research before choosing the right bank for yourself, as you deserve the institution that feels right to you!