how do the deposits with the banks become their source of income
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Interest rates vary depending on the lock-in period of deposits... where the depositer agrees for keeping the deposit for a predetermined time period. So bank can invest it in mutual funds, or to provide loans.
But when it is only a savings account deposit then the interest provided is very low...because you can use it whenever necessary and it has no any lock-in assurances.
But when it is only a savings account deposit then the interest provided is very low...because you can use it whenever necessary and it has no any lock-in assurances.
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Hey nia,
We deposit our money in the bank and several people comes bank to tak loan either for small purpose or big.Then bank charges higher compound interest from borrowers and provides us Simple interest on our deposits. The difference between the interest being charged from borrower and interest given to depositer is the main saving of banks.
Hope dis helps you!
With regards,
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