Whether You Save or Get a Debt, the Banks Benefit

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At no time will a bank decline your request to save money. Banks readily welcome you to save money as well as to get debts. You will never get a decline for your request to save money because the bank intends on using your savings to gain profit. In as much as the bank gets profits when you take debts, it on cases declines applications by some to get loans. This is because it wants to minimize risks associated with borrowers who seem unreliable especially with making timely payments.

Savings from customers to the bank is a simple concept that not many have been paying a keen attention to. While many think it only benefits them, it benefits the bank too in a large measure. When you open a savings account, the bank staffs are happy. Banks usually rely on deposits to offer loans. When a loan has huge deposits, it is able to advance more loans. This is because it has a large reserve and can accommodate dispensing more funds and thus growing its loan book. When you save money, the bank promises a certain percentage in earnings to your account for making the savings. Many savings accounts have restrictions as to the withdrawals the account owner can make. This helps keep the funds acting as the bank’s trading cash.

When the bank loans money to borrowers, the money is repaid at a certain interest rate. This interest rate is quite higher than that offered to those making savings. The difference between the two interests is the bank’s profits. This means that the bank usually get a high profit from the money they use to trade.  Even with the banks expenses in costs associated with maintaining the banks operation, they still get to keep a good amount of cash that helps them expand their business even opening up new branches. Whether you choose to save or to take a loan, remember that in both ways the bank still gets to benefit from what you need. However, the biggest benefit comes when you choose to take up a loan for your needs.

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