How do savings banks make a profit?
In the current low interest environment, I am curious how does a savings bank make money?
Don't they need to attract depositors with cash so they in turn loan them out at a higher rate?
If they are only paying out 0.2% on deposits, who in their right mind would deposit money in savings account? How are they surviving in this very low interest climate?
There are several ways they make money:
* charging fees for services like printing checks
* charging monthly account maintenance fees
* loaning money backed by deposits and profiting from the interest
Fees are only a small part of a bank's revenue. In the old days, they can loan out at 5-6 percent for mortgages and still pay out 3-4% to depositors. The difference was enough to create profit and pay for operating expenses. What happened to that?
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