How does a bank use my money anyway?

Banks typically have two sources of money—one from the deposits you and I make and the other from each bank’s cash reserve (actual cash on hand banks are required to have in case we all decide to take our money out the same day).  When you deposit your money into a bank, it goes into a pool of money along with other people’s money.  Through deposits and cash reserve, banks lend money and/or invest.  In addition, banks make money by charging fees on its services such as checking, loans, and credit card services.

Posted in Banking Basics |

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