How do Banks work? Can someone please give me a Big picture on how they operate.. Thank You :)?

Question

How do Banks work? Can someone please give me a Big picture on how they operate.. Thank You :)?

Answer 1

If you poke around at federalreserve.gov, you may get some answers.

Answer 2

they take your money, use it for other things while giving you very little interest back for placing your funds in their hands and then charge you outrageous amounts of charges if you overdraft.

Answer 3

That is a pretty big question, but here is a general answer:

Banks create deposit accounts where customers can keep their money.  Checking accounts, savings accounts, and certificates of deposit are basic account types.  Some of these accounts are interest bearing - meaning the bank pays customers for keeping their money in the bank.

The bank in turn loans money to private individuals and businesses at a higher interest rate than they pay people who hold deposit accounts.  

If a bank has $10 million in deposits, it will loan out $9 million and keep $1 million in reserve to settle demands on deposits.  

Banks also make money from banking fees, investment services, and other services.

This is a simple explanation, I hope it helps.

Answer 4

The alternative is keeping all your money in a sock under your mattress.