How banks work

rayd360 — Fri, 28 Aug 2009 21:34:21 +0000

How do banks make money?

How do banks make money?

Banks are just like any other business; the only special thing about banks is that their product is money instead of a random widgets or services.

So basically they make money on the interest they charge people for loans which is higher than the interest they pay on the depositors account. The bank receives $100 dollars, loans it out and makes $105 dollars then pays the depositor $101 making $4 bucks. do this over and over and you have yourself a profitable business.

Loaning money is inherently risky because they never know if they will get their money back. That is the reason people with no or bad credit have higher interest rates. If you (for some unfortunate reason) die today and have a spouse then your debt is transferred to them; however you cannot inherit debt from your parents and it becomes the banks loss.

Another way banks make money is from credit cards. The bank is paid anywhere between 2% and 6% of the total transaction based on the purchase size and place of business. That is one reason many banks reword you for having a credit card opposed to a debit card. as you can see, it is a very profitable business.

Top 15 issuers of general purpose credit cards for 2008 based on outstandings
1. http://www.creditcards.com/Chase.php” target=”_self”>Chase – $183.32 billion
2. http://www.creditcards.com/Bank-of-America.php” target=”_self”>Bank of America – $166.32 billion
3. http://www.creditcards.com/Citi.php” target=”_self”>Citi – $106.74 billion
4. http://www.creditcards.com/American-Express.php” target=”_self”>American Express – $88.02 billion
5. http://www.creditcards.com/Capital-One.php” target=”_self”>Capital One – $60.08 billion
6. http://www.creditcards.com/Discover.php” target=”_self”>Discover – $49.69 billion
7. Wells Fargo – $36.36 billion
8. http://www.creditcards.com/HSBC-Bank.php” target=”_self”>HSBC – $29.97 billion
9. US Bank – $18.53 billion
10. USAA – $17.48 billion
11. Barclays – $11 billion
12. Target – $8.65 billion
13. GE Money – $7.51 billion
14. Advanta – $5.02 billion
15. First National – $4.93 billion
(Source: Nilson Report, March 2009)

There are other ways banks make money such as ATM fees, securities and investments but loans and credit cards are by far the most profitable ways banks make money.

(Bukisa ID #140043)

Content Source: http://www.bukisa.com/articles/140043_how-do-banks-make-money”>How do banks make money? – Bukisa.com

Google Adsense

rayd360 — Fri, 28 Aug 2009 01:38:19 +0000

This is how to use google adsense

How to start a blog

rayd360 — Fri, 28 Aug 2009 01:37:21 +0000

what tools to start with – blogger, wordpress, ehow, bukisa, and the benefits of each things to blog about – interests or things that dont go out of style how to advertise – backlinks, feedburner best locations to place ads – image

What you will learn from this page:

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where to place them – diagram

To startblogging you will have to choose a program. I perfer free websites to blog such as wordpress, blogger, ehow and bukisa. There are benefits and drawbacks to each.

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WeEntertaining

How banks work

How do banks make money?

Google Adsense

How to start a blog