How do banks earn profit from lending money to their customers?

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1029019

2026-08-17 18:15

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The customer pays the bank interest on the loan. The bank pays some of this interest to its depositors.

The difference between incoming interest and outgoing interest (minus operating costs) is the bank's profit. With most loans charging more than 10% interest and most deposit accounts paying less than 0.5% interest, the bank can make loads of profit!

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