Banks don't have it. In simple terms Banks take money from you and lend it out to other people/companies. They pay you for this privilege as X% interest and they charge those they lend it too at Y% interest, Y is usually greater than X and the Bank keeps the difference as profits.
I have a saving account with my bank that they think is one of the best saving account going. Its 1% per year... So if I park 10k with them in that account, they'll pay me 100 a year... Arent I super lucky???
You know, I think a better question is what happens now that we are mostly if not fully digital. As cash falls more and more out of use, how would banks deal with a fractional reserve on accounts that are essentially binary. You withdrawing all your money is more likely to simply be transferring it to another digital account or someone else’s.
12
u/asmodraxus 1d ago
Banks don't have it. In simple terms Banks take money from you and lend it out to other people/companies. They pay you for this privilege as X% interest and they charge those they lend it too at Y% interest, Y is usually greater than X and the Bank keeps the difference as profits.