Banks are a business, and you are the cash cow

[un_rank]

Banks are made out to be an essential service for the benefit of society similar to other basic amenities we use to get through our needs, but in reality banks are businesses and we are the profit, meaning we exist and patronize the banks to make money for them.

Let's take a look at some of the ways banks make money^[1],

Here’s a look at the ways that banks and credit unions make money, often off your money, no less:

1. Deposits: Banks know how to leverage money in genius ways. When you deposit money into your savings account or certificates of deposit, your bank will pay interest as an incentive for you to park your cash there. That’s because banks need your money to make loans. Your cash isn’t really physically in your account, waiting — your bank is making lucrative deals lending it to other customers and businesses until you need it.

Banks want you to trust them enough to keep your money with them in the promise to safeguard it for you and would even offer you an interest to keep it, while they use your money to make even more money.
They convince you that you are protected by fractional reserves for any incidence that occurs, but banks can still fail to balance their sheets between your money that they took in and the amount they lent out, leading to a bank failure:

The most common cause of bank failure occurs when the value of the bank’s assets falls to below the market value of the bank’s liabilities, which are the bank's obligations to creditors and depositors. This might happen because the bank loses too much on its investments. It’s not always possible to predict when a bank will fail.

In the event of this they would bail out the banks with more money, making you poorer by increasing the money in circulation, until the economy can take no more.

2. Banks Make Money With Bank Fees
Fees are one of the more obvious ways banks make money. Imagine millions of customers paying the following banking fees regularly:

Account fees for having a bank account
Fees from loan applications
Overdraft fees
Monthly maintenance fees
Out-of-network ATM fees for cash withdrawals
Commissions charged for investment services or making trades
Penalty charges like credit card late fees and bank overdraft fees

In addition to loaning your money out the banks charge you for the services they provide and in some cases do not provide for you.
With overdraft fees, the banks could encourage you to spend above your limit so as to charge you the fees and can even manipulate the transaction history to rob you milk out more money from you^[2].

3. Banks Make Money With Interchange Fees
Retailers pay interchange fees every time a customer uses a credit or debit card in a sales transaction. Interchange fee rates are set by credit card companies and are normally a percentage of the purchase plus a flat rate.

Here’s a simplified example: The interchange rate set by a credit card provider for each transaction is 2.00% plus $0.15. You buy something for $100 with your debit card. The small business or store would pay an interchange fee of $2.15. The store keeps $97.85 of the purchase price, and the $2.15 interchange fee goes to the bank that provided you with the credit or debit card.

4. Banks Make Money Through Investments
Investment banks are different from commercial banks. They make their money by selling services to companies, governments and investment funds instead of earning their money from consumers. Although this doesn’t apply to consumers, it’s good to know it’s another way banks make money, thereby making it possible for you to enjoy your free checking account.

Banks are designed to profit at your expense, through legitimate or even fraudulent ways, and with the protection provided for them, they can fail multiple times and would be bailed out, to ensure you continue to trust their services and keep your money with them.

Do not be part of the fiat rat race, use BTC.

[1] https://www.msn.com/en-xl/money/personalfinance/how-do-banks-make-money/
[2] https://www.motherjones.com/kevin-drum/2009/07/overdraft-scam/

- Jay -

[Nwada001]

It's just business as usual, and it's no longer something new for us all again. 
The system has been designed in that way, which is why we keep on seeing new banks with different kinds of promises, but at the end, they are all for the same thing. 
 
What they do: 
They open an organization called Bank, advertise themselves, and you and I go in with our money and entrust them with it. This deposit is not just done by you and me but by millions of people; the money you deposit into this account can't come out the same way again; they charge you for card maintenance, SMS charges, etc. 
They use depositors. a sum of money to lend to investors who are winning to pay back with profit at their agreed duration, with tangible collateral that can be sold out to recover both the profit and the lend out amount. 

When depositor A wants to withdraw his or her money, they will use depositor B's money to pay depositor A, just like that. If everyone wants to withdraw all their money at once, that's where you hear of network downtime and issues from one place to another. They delay because they run around to recover all the lend-out money, and if they can't get it all, you hear about bankruptcy and depositors' money is now at risk. It's now 50/50, so the chances of recovery have become very small. 
 

[Frankolala]

Banks are business people,which help you to keep your money and in return,you pay them for it. This gives them the opportunity to use your money for business by loaning it out to people with interest at the end of the day. The use your own money to make profit for themselves and leave you the owner with no profit. We also take permission from them before we can use our money that is been entrusted to them.

If nobody takes his money to the bank then the banks will shutdown due no unavailability of funds to run the business. Anyway,there are some people that are weak in taking charge of their businesses finance or they are poor in handling personal funds,so they take them to the bank to help them manage their money and to keep it safe. The main purpose why bank is needful is because we can't keep huge amount of money or treasure in our houses to prevent it from being stolen by a thief. We also needs the banks for our daily transactions either to receive or send money to someone in a distance from us.

[un_rank]

...
The main purpose why bank is needful is because we can't keep huge amount of money or treasure in our houses to prevent it from being stolen by a thief. We also needs the banks for our daily transactions either to receive or send money to someone in a distance from us.

The main purpose banks are useful is cause governments make them authoritative financial establishments.
There are many alternative assets one can use to huge amounts of money than stashing it away at a bank account to be eaten away by inflation as the printing machines work round the clock. One of such alternatives is Bitcoin.

For daily transactions, you do not need more than a couple hundred dollars at a time.

- Jay -

[uneng]

Banks are the middlemen between you and profitable investments. Instead of paying you a fair interest for your idle money there compared to the total sum of profit they make by investing it, they just pay you a small percentage, usually inferior to the yearly inflation of the country, while filling their pockets with the largest portion of the profit made. And unfortunatelly they are protected by the government and its laws.

If you borrow money from the bank, you are going to pay high interest rates, but you are forbidden from lending money to other people with the same rates the bank charges, under the risk of being considered a loan shark, a thief. So, isn't the bank a loan shark as well?

[coinerer]

When we deposit our money in the bank, the bank lends our money to other customers and takes interest from it at a fixed percentage rate. But if we keep our money in the bank only as savings then the bank gives us only 1-2% APR. And if we keep it as FD then the bank gives us 5-6% interest and they cut income tax 10-15% from here.  And on the other hand banks provide loans to customers and charge interest ranging from 8-15%. And the bank deducts annual maintenance charges, debit/visa/master/credit card charges, sms charges and other charges from us. Banks are just being a middleman, doing business of billions of dollars yearly

[Dr.Bitcoin_Strange]

Of the four steps banks use to make money from customers, the most rewarding one of them all is number two: banks make a lot of money from the charges they deduct from customers every day.

For example, with the way banks charge on every transaction, which in my country is about $0.05 per bank transaction charge, which depends on the amount you are transacting at once, if you are transacting about $500-$1000 at once, you will be charged a transaction fee of about $0.1.

So if 100,000 transactions occur in a bank per day, with a service fee of $0.05 each, that's a whopping $5000 profit, just in one day. If it's also $0.1 per transaction X 100,000 transaction, that another $10,000 profit in one day. OP I concur with the first paragraph of this thread that we are indeed making more money for the bank.

Without us (the bank customers) patronizing them, first, they would not have enough money to loan out, and they would not make money every day from the fees they charge on each customer's transaction.

[rossjamie]

In my country banks not only used just saving money, but for paying your utilities like electricity, water, tuition fee, cable TV, even paying starbucks cofee directly without using VISA or Mastercard payment gateway, very creative though. And the most interesting thing was there is banks that "not in business", I mean no transaction fee, no interest, no saving fee, no tax. The mechanism just like putting your money in your own safe deposit box but with someone

[Ultegra134]

Banks are still businesses that are aiming to generate profit, just like any other business. Whether we like it or not, they are necessary in our day and age, and they simply cannot be avoided forever. Most transactions are paid via card, while your monthly salary is also deposited into a bank account. You're forced to use them. I also dislike their business model, which involves paying fees for bank transfers, payments, currency exchange, debit or credit card subscriptions, and numerous other ways that the OP already mentioned, some of which I didn't even know existed.

[panganib999]

The world, banks included, make money off of making debts. Money isn't made from printing it alone, it's made from making its concept tangible, which also happens to be the case when you make debt. You ask for a loan, the bank lets you borrow money to be paid over a certain period of time and wait, you also have to pay for the interest itself! Oh no, where did this come from? God knows, they just made it up.

But this is okay, from a business perspective, except using our money for them to invest in stocks, bonds, and real estate, the banks make money off of issuing debts to people. I don't really see it as being a cash cow, because after all you get something out of every interaction you commit to with a bank. Cash cows are especially reserved to enterprises that bleeds their customers/users out of their money, with the customer not getting anything from the ordeal.

[bittraffic]

I didn't realize this until I got into Bitcoin and learned from the people who said our BTC wallet is our bank. Lending out more than they have must be profitable.

When FED was not raising the interest rate for a decade, banks must have been celebrating every day while they make money from those treasury bonds but now that bonds are not profitable, it's the depositors that are still affected and not them.

[BitDane]

Banks being a business surely means they are in for profit.  Those who created the banking system is somehow intelligent because they had created a system where they can earn money without using their own fund.  Although this scheme is pretty obvious to people, people tend to embrace the system because they think that it is better to have a 1% to 2 % interest than just leaving the money idle in their home vault creating 0% profit at all.

I didn't realize this until I got into Bitcoin and learned from the people who said our BTC wallet is our bank. Lending out more than they have must be profitable.

When FED was not raising the interest rate for a decade, banks must have been celebrating every day while they make money from those treasury bonds but now that bonds are not profitable, it's the depositors that are still affected and not them.

Honestly, I do not think holding Bitcoin made a difference from holding fiat money. And still thinks that it is better to use a service that can give us interest on our money.  But in the current situation, since Bitcoin keeps on appreciating its value, we are very optimistic in holding BTC in our own wallet for profit, and I agree.  Indeed it outweighs the interest banks offer but what if in the coming years, Bitcoin price becomes stagnant, can we still say that holding Bitcoin is way better in terms of profitability than depositing it in banks that give small profit?

In case, I always think Bitcoin is advantageous in terms of sending transactions due to not needing a third party to process the transaction.  But in terms of holding it, I do not think it is different from holding fiat money in our vault when the volatility of bitcoin somehow becomes stable.

[Nwada001]

...
The main purpose why bank is needful is because we can't keep huge amount of money or treasure in our houses to prevent it from being stolen by a thief. We also needs the banks for our daily transactions either to receive or send money to someone in a distance from us.

The main purpose banks are useful is cause governments make them authoritative financial establishments.
There are many alternative assets one can use to huge amounts of money than stashing it away at a bank account to be eaten away by inflation as the printing machines work round the clock. One of such alternatives is Bitcoin.

For daily transactions, you do not need more than a couple hundred dollars at a time.

- Jay -

Adding to that, the banking sector is an establishment set out by the government to help monitor and make proper implementation of its monitoring policy. That's to say, the government is using the banking sector to monitor how their fiat is being used, when it can be used, the limit to which we can use it, etc. We actually are never in control over that said Fiat. It will only look like we have them, but the other way around, it all belongs to the government because they never stopped being in control.

[Fesatmas]

...
The main purpose why bank is needful is because we can't keep huge amount of money or treasure in our houses to prevent it from being stolen by a thief. We also needs the banks for our daily transactions either to receive or send money to someone in a distance from us.

The main purpose banks are useful is cause governments make them authoritative financial establishments.
There are many alternative assets one can use to huge amounts of money than stashing it away at a bank account to be eaten away by inflation as the printing machines work round the clock. One of such alternatives is Bitcoin.

For daily transactions, you do not need more than a couple hundred dollars at a time.

- Jay -

Yes, the position here that determines policy is for the government to coordinate and to get money from the people that is used for development in the country.
Banks are indeed made in such a way as if they will become the heart of the economy in various countries, now which companies are not related to banks? and countries that do not have banks?. I honestly agree with the past banking system, which provided guarantees for the money they spent, namely peg with gold which was the measure of value and made money printing, so it was quite difficult to print money without the gold they had as a guarantor, but that changed with a money system that is no longer held in gold, of course bankers can easily print their money as they please.
then the solution is bitcoin which has a limited supply and cannot be played like they play with fiat.

[Yawa2020]

We can paint banks all we want but the honest truth is that we can not do without fiat. The aim of every established business is definitely to make profit. We all know that banks are strictly out for business and of course they are here to make profits. This is post is centered on negative aspects of banking forgetting the positive side. In as far as I support the BTC, banks should not be dent as if they are ripping people of their hard earned money.

[Cryptomiles1]

No matter what they promised us all banks are the same because same thing bank A want your money same thing Bank B needs it for, but sincerely speaking we can hide the fact that banks do we use our money for business at last we are being rewarded with fractions as an interest rate mainwhile there's a place to store our money which would give a reasonable amount in return than just bank.
That's why I don't do my savings to bank anymore rather store it with bitcoin since nothing comes from banks rather using our heart earn money for trade in other for them to make profits.

[dothebeats]

I would stop using banks if they no longer serve me. They still give good credits with very low interest, which I then use to purchase goods or other services that will help me net even more. If they are using my money, I will also be using theirs. It's a no-brainer, and only those people who can make opportunities on what's in front of them will realize that banks can also be utilized properly if you know how to. They are a business, and they're designed to take profits. Any other businesses use consumers as cash cows because where else will they get their money from, anyway?

[dunfida]

I would stop using banks if they no longer serve me. They still give good credits with very low interest, which I then use to purchase goods or other services that will help me net even more. If they are using my money, I will also be using theirs. It's a no-brainer, and only those people who can make opportunities on what's in front of them will realize that banks can also be utilized properly if you know how to. They are a business, and they're designed to take profits. Any other businesses use consumers as cash cows because where else will they get their money from, anyway?

Just some mutual benefit into each other if we do speak about reality.In fact, i did make out some loans which they do have that less than 1% interest per month and i did make a lending firm or company
to have that 10% monthly interest which i could say that it is really worth.If you do just know on how to handle your finances then you would be finding these loans to be that helpful.
This is where some people do miss out on seeing this kind of opportunity but of course before taking a loan and making yourself get approved then it would be an another story.
We do know that getting through bank loans does require lots of paperworks.

[Poker Player]

Banks want you to trust them enough to keep your money with them in the promise to safeguard it for you and would even offer you an interest to keep it, while they use your money to make even more money.

In reality, although banks need deposits in recent years when interest rates were low, they needed them less than ever, because they got the money they wanted from central banks. In reality, although banks need deposits in recent years when interest rates were low, they needed them less than ever, because they got the money they wanted from the central banks, so they gave little or no interest for depositing your money there.

They convince you that you are protected by fractional reserves for any incidence that occurs, but banks can still fail to balance their sheets between your money that they took in and the amount they lent out, leading to a bank failure:

Fractional reserve? Lol.

Why isn’t the Federal Reserve requiring banks to hold depositors’ cash?

The Federal Reserve Board reduced banking reserve requirements to zero in March 2020. Since that time, banks in the United States have not been required to actually hold any depositor money in the bank, making a flawed system — fractional reserve banking — worse.

Today's economy is like a casino but one of the worst, like 1xCrap.

[adaseb]

I don’t think banks really care about monthly fees. Most banks will waive the fee if you are a student or if you have a certain balance at the end of the month.

The way they make money is by loans and mortgages. With expensive real estate these days they get hundreds of dollars of interest each month per mortgage pretty much. And the collateral is very safe since it’s real estate.

[Poker Player]

I don’t think banks really care about monthly fees. Most banks will waive the fee if you are a student or if you have a certain balance at the end of the month.

The way they make money is by loans and mortgages. With expensive real estate these days they get hundreds of dollars of interest each month per mortgage pretty much. And the collateral is very safe since it’s real estate.

Instead of simply saying what you think, you could have spent a few seconds to search the internet, and you would have realized that what you think does not match reality.

A review into banking by the Financial Conduct Authority (FCA), the City watchdog, has found that around 40% of the value that major banks obtain from current accounts is by using customers’ credit balances as a funding source, followed by overdraft fees and charges, which account for 30%.

Source: Overdraft fees and charges are major source of income for banks

That it is the second largest source of revenue, accounting for 30% of revenues is no small feat. There are always exceptions, such as the case of the students you mention, because they know that they either have no income or the income they have is very low, and they prefer to establish a business relationship now, to earn more money from them in the future. It is a long term investment.

[Gallar]

that's how banks work to get money,
provide services for a fee.
but I understand what he's doing, and I'm going to be neutral on this.
if the bank does not charge such fees, how does the bank pay its employees, how does the bank replace funds whenever there is a loss (such as a borrower running away and not paying), and that all must be taken into account.
I don't completely hate the bank, because I don't see it from the point of view of the fault. even though the bank is indeed extorting profits from its customers, but still the bank has its own services for people around the world.

I invest in bitcoin through the bank, and so do withdraw my earnings through the bank. and do you still use bank services? (to search for your investment, withdraw money, and to fill in certain balances).
Even though the bank has quite a big mistake, I also will not forget the ease of transactions that have been provided by the bank. Like many ATM machines, it makes it easier for me to withdraw money when I need it or in an emergency, and that's a positive thing too.
The bank does extort in terms of costs, but that's reasonable because the bank is not a company that is inhabited by several employees and not only extorts, but also provides services. in essence, I'm just open-minded about all the incidents regarding this bank.

I write this from my positive point of view

[gaston castano]

I think if you use it properly the bank can help someone to improve their business. but most people are trapped in loans to pay off their bills, so as you say they are cows being squeezed,until now I have never borrowed money from a bank to repay things that I don't really need.

[YUriy1991]

I think The statement "Banks are a business, and you are a cash cow" is a common sentiment among those who believe that banks are solely interested in making profits at the expense of their customers. While banks are indeed a business and their main goal is to generate profits, it is important to note that they also provide an important service to society by facilitating the flow of money and credit, promoting economic growth and development.

Even so, banks do make money in various ways, some of which are mentioned in the sources provided. For example, banks earn interest on loans made to individuals and businesses, charge fees for various services, and make money through investments. While this practice may appear exploitative, it is important to understand that banks also assume the risks associated with lending and investing, and therefore charge fees and interest rates to cover those risks.

It is true that some banks engage in fraudulent activities, such as manipulating transaction history and charging exorbitant fees. Such practices are unethical and should be condemned. consumers need to educate themselves on simulating charges associated with their bank accounts, credit cards, and loans, and be vigilant about monitoring their transactions to prevent them from being taken advantage of.

[Alpha Marine]

Banks don't get any money from anywhere else other than customers' funds. It's those funds that they use to invest to get their money through profits.
Just know that when you deposit your money in the bank it's like lending money to a person. That person might keep that money for you or he can use it to do his own business and make a profit. If he does any business with the money then two things are involved, the investment might either fail or succeed, If it succeeds then your money is safe, if he fails then your money is not safe, either way, he's not losing much because it was not his funds that were at risk.
The funny part is, if an individual starts doing exactly what the banks are doing then hell be termed a fraud but it's totally okay

[Plaguedeath]

If you don't want to get many fee charges from the banks, just hold your fiat in your home!

If you think the loan interest is too high and looks unfair, just don't take any loan from banks!

As simple as that, this make you not getting involved with banks, but you're need to deal how to protect all of your money in your house and the inflation rate which occur for every year. I don't suggest you to hold fiat, but based on your thread the problem is about banks.

[un_rank]

I don't suggest you to hold fiat, but based on your thread the problem is about banks.

If banks mess their job up it affects all holders of fiat. Economic crisis are usually results of poor actions made by banks.

Keeping fiat in our homes away from banks would not be a solution, you still deal with inflation and now have to safely store as much amount of cash that you own and prevent it from getting damaged.
You need several bags to hold $15,000 worth of cash, the lower the national currency, the higher the bags you would need. You only need a hardware wallet not much bigger than a USB stick to hold as much as $15,000 (or any amount) in Bitcoin.

- Jay -

[LogitechMouse]

Well, it's obvious that they are a business because if they're not, I mean how would large banks survive without any revenue at all. I did a quick search on how they are earning, and base on one website, I saw this: LINK

Banks generally make money by borrowing money from depositors and compensating them with a certain interest rate. The banks will lend the money out to borrowers, charging the borrowers a higher interest rate and profiting off the interest rate spread.

It's almost the same as those lending applications that we are seeing in the crypto space like Celsius, NEXO, etc. but the interest there is just way higher.

The problem right now is that, people have been taught that the best way to save their money is thru putting it in a bank. These banks taught those people to save their money in them because it's the safest way of saving money. People in the past are the ones who had this thinking of the best way of saving money is to put it into banks, and it has been passed from other people. TBH, most of the people who are using banks don't know that they are being used as a "cash cow" because why will the banks teach it to them that they will use their money to lend it out to borrowers.

I don't know if there's any solution to it, but it's good that I saved money in a different way, and for a different reason because I'm not saving just for the sake of saving, but I'm saving so I have money to invest with, and I will never put any money on banks unless it's an emergency funds. On the other hand, I think there's still good things that banks are providing to their customers. I just don't know what they are because I'm not using banks that much. Maybe the fact that you can get a loan from them as long as you have good credit is considered a benefit for the customer.

[Ndabagi01]

Fiat banks in general have advantages and disadvantages, but the truth is that we can't do without banks for the time being, even if we're anticipating a decentralized system. If at least 50-70% of the people you do business with don't like or tolerate the use of decentralized currencies, it will be more difficult to live with the reality.

Banks are here to do business, and we are undoubtedly their regular clients. The fees for each service simply vary in order to entice customers to choose which services best suit them and which they will use. Having said that, their fees are relatively reasonable for both new and existing customers, and they always have a way to persuade their customers when they are at fault or want to improve or increase the fees for their service. We know that the government always has their own share of the fees we are charged for because they regulate the centralized system.

[Yogee]

that's how banks work to get money,
provide services for a fee.
but I understand what he's doing, and I'm going to be neutral on this.
if the bank does not charge such fees, how does the bank pay its employees, how does the bank replace funds whenever there is a loss (such as a borrower running away and not paying), and that all must be taken into account.

Service fee is probably the least source of income for all banks so they have enough to cover salaries and wages. It's not easy to get a loan you know. Banks usually ask for a collateral from large borrowers do they not? That means they are really not at a loss when a loan is defaulted. They also have a lot of ways to collect even if it's non-collateral like utilizing collection companies.

[Queentoshi]

I think if you use it properly the bank can help someone to improve their business. but most people are trapped in loans to pay off their bills, so as you say they are cows being squeezed,until now I have never borrowed money from a bank to repay things that I don't really need.

Banks are business and they are using our money to do business and not giving us anything in returns, cause come to think of it, we pay for every transaction we do, pay for card maintenance, we pay for SMS charge and by the end of the day and we are the one running on a lost, some times I get debited and I don't even know what for. Not all accounts are granted business loans, and the majority of the account this banking sectors make their money from are the people who has a normal account collecting unnecessary charges. Like the topic we are the cash cow.

[CageMabok]

I think if you use it properly the bank can help someone to improve their business. but most people are trapped in loans to pay off their bills, so as you say they are cows being squeezed,until now I have never borrowed money from a bank to repay things that I don't really need.

Taking a loan from a bank is like that, because you will always feel endless pressure before you pay it all off. So it's better to consider it before you start taking loans, because banks are also people who need customers who are able to rotate their money so they can benefit from their own customers. Now try to use bank services as wisely as possible so that you get comfortable without feeling too much pressure on yourself.

[Gallar]

that's how banks work to get money,
provide services for a fee.
but I understand what he's doing, and I'm going to be neutral on this.
if the bank does not charge such fees, how does the bank pay its employees, how does the bank replace funds whenever there is a loss (such as a borrower running away and not paying), and that all must be taken into account.

Service fee is probably the least source of income for all banks so they have enough to cover salaries and wages. It's not easy to get a loan you know. Banks usually ask for a collateral from large borrowers do they not? That means they are really not at a loss when a loan is defaulted. They also have a lot of ways to collect even if it's non-collateral like utilizing collection companies.

indeed, if you want to borrow money from the bank, you are always asked for a guarantee commensurate with the loan, and it is mandatory to do so.
here I will tell you a little about people around me who have borrowed money from banks.

my neighbor borrowed money from the bank, with a guarantee of motorbike ownership certificates. If the motorcycle is sold, the price ranges from 3,000,000 Rupiah, if in dollars it is around $ 200.48. and all went well, the borrower also got the loan of 3,000,000, with an interest of 15%, and with installments of three years.

after three years the borrower finally paid off the debt. and didn't wait for a while, the bank immediately offered a second loan to this customer/borrower, and this time the bank offered a direct loan of 15,000,000 if you put it in dollars around $1,000.39. With the same interest, three year installments, the same collateral i.e. the motor vehicle ownership certificate, and the motorbike if sold is around 3,000,000 ($200.48). why is the customer being offered a direct offer with a larger loan? because the customer is smooth in paying monthly installments.

but what happened when this second loan was that the borrower was not smooth in paying, he was in arrears for almost five months without paying, even though the installments had only been running for seven months. and the bank was forced to confiscate the collateral for the motor vehicle ownership certificate along with the motorbike, and the borrower with that has nothing to do with the bank, the point is paid off with the guarantee.

the question is whether the bank did not lose, lent 15,000,000 ($1002.39) and the borrower was not smooth in its payments, and only got a motorbike that cost 3,000,000 ($200.48) with an additional two months installment. Obviously it is a loss on the part of the bank.

that's one customer, imagine if 100 to 1000 customers, that's quite a loss for the bank.

[Freddie Boyer]

that's how banks work to get money,
provide services for a fee.
but I understand what he's doing, and I'm going to be neutral on this.
if the bank does not charge such fees, how does the bank pay its employees, how does the bank replace funds whenever there is a loss (such as a borrower running away and not paying), and that all must be taken into account.

Service fee is probably the least source of income for all banks so they have enough to cover salaries and wages. It's not easy to get a loan you know. Banks usually ask for a collateral from large borrowers do they not? That means they are really not at a loss when a loan is defaulted. They also have a lot of ways to collect even if it's non-collateral like utilizing collection companies.

indeed, if you want to borrow money from the bank, you are always asked for a guarantee commensurate with the loan, and it is mandatory to do so.
here I will tell you a little about people around me who have borrowed money from banks.

my neighbor borrowed money from the bank, with a guarantee of motorbike ownership certificates. If the motorcycle is sold, the price ranges from 3,000,000 Rupiah, if in dollars it is around $ 200.48. and all went well, the borrower also got the loan of 3,000,000, with an interest of 15%, and with installments of three years.

after three years the borrower finally paid off the debt. and didn't wait for a while, the bank immediately offered a second loan to this customer/borrower, and this time the bank offered a direct loan of 15,000,000 if you put it in dollars around $1,000.39. With the same interest, three year installments, the same collateral i.e. the motor vehicle ownership certificate, and the motorbike if sold is around 3,000,000 ($200.48). why is the customer being offered a direct offer with a larger loan? because the customer is smooth in paying monthly installments.

but what happened when this second loan was that the borrower was not smooth in paying, he was in arrears for almost five months without paying, even though the installments had only been running for seven months. and the bank was forced to confiscate the collateral for the motor vehicle ownership certificate along with the motorbike, and the borrower with that has nothing to do with the bank, the point is paid off with the guarantee.

the question is whether the bank did not lose, lent 15,000,000 ($1002.39) and the borrower was not smooth in its payments, and only got a motorbike that cost 3,000,000 ($200.48) with an additional two months installment. Obviously it is a loss on the part of the bank.

that's one customer, imagine if 100 to 1000 customers, that's quite a loss for the bank.

It seems to be a common practice for banks to require collateral equivalent to the loan when borrowing money. However, the cases presented here show how banks end up losing money despite having collateral.

While it is true that banks offer larger loans to customers because of their smooth repayment history, the borrower's failure to make payments results in the bank seizing collateral that is only worth a fraction of the loan. In my view, if this happens to a large number of customers, it can indeed result in a sizable loss for the bank.

[ancafe]

Banks are made out to be an essential service for the benefit of society similar to other basic amenities we use to get through our needs, but in reality banks are businesses and we are the profit, meaning we exist and patronize the banks to make money for them.

In this aspect, we have been taught by previous people (parents) that saving money in the bank is not the best solution to maintain the value of the currency we have, the rest we are advised to buy gold as a substitute for these savings. Today what our parents said before is proven, that the money you put in the bank in the past has lost value.

Bitcoin has almost the same function as gold even though the journey is different and can maintain value even though it fluctuates, but for reasons that are wiser to use money to invest in bitcoin than keeping money in the bank is much better, because you will see opportunities that are different from the previous mindset, every decision is one's way of seeing opportunity.
 

Banks are designed to profit at your expense, through legitimate or even fraudulent ways, and with the protection provided for them, they can fail multiple times and would be bailed out, to ensure you continue to trust their services and keep your money with them.

They will continue to suck your blood to process bank trips, without us they will never develop and it can be said they will never be able to provide salaries to their employees. This system can make them profitable and we are only given interest from the overall profits of the savings we have.

But what you need to understand is not the banks that make all of this messier, but rather the system they employ and try to make profits at ridiculous multiples. If you have ever heard of the Muamalah (profit sharing) system, that is the correct system for maintaining financial stability, both for individuals and for the state.

[Accardo]

When we deposit our money in the bank, the bank lends our money to other customers and takes interest from it at a fixed percentage rate. But if we keep our money in the bank only as savings then the bank gives us only 1-2% APR. And if we keep it as FD then the bank gives us 5-6% interest and they cut income tax 10-15% from here.  And on the other hand banks provide loans to customers and charge interest ranging from 8-15%. And the bank deducts annual maintenance charges, debit/visa/master/credit card charges, sms charges and other charges from us. Banks are just being a middleman, doing business of billions of dollars yearly

Banks have lots of money through this method, more like compound interest. They build estates and businesses with people's money and live in well furnished houses while their cash cow stays in a bad neighborhood. Banks have nothing to lose in compound interest, but customers suffer inflation from the money invested on compound interest. Money invested into compound interest 20 years ago yields huge profits now, but when the buying power is converted, the customer is left with no profit; due to inflation. Even the money lent to business owners open's door to collateral, which they get if the business or person doesn't pay their debts. It's a platform with lots of properties gained through customer's money. I've heard of people who are not able to claim their father's money from the bank, what happens to the deceased person's money?

[Newlifebtc]

We can paint banks all we want but the honest truth is that we can not do without fiat. The aim of every established business is definitely to make profit. We all know that banks are strictly out for business and of course they are here to make profits. This is post is centered on negative aspects of banking forgetting the positive side. In as far as I support the BTC, banks should not be dent as if they are ripping people of their hard earned money.

when we are making a reference of Banks we know that banks of today and the bank of incoming have the same thing in mind and what they have in mind is business, I believe that there is no agitation we can cause today that will make Fiat currency not to be into existence and provided that Fiat currency exist bank will always exist

[Sir Legend]

The bank system is designed not to benefit consumers, for example if we want a manual transfer it will take a long process. It's natural that nowadays most people prefer cryptocurrencies because full control is in their hands without the need for third party services.

[dezoel]

I think pretty much all of us already know that banks are businesses and they generate revenue for what they do for the community, which is to keep their money or let them spend or transfer them. All their models, services, and offers are in some way monetized for themselves and whenever we use any of their services, ATMs are a big example for that of their frequent usage, they earn money from that.

I've always thought about how much money banks make only by the ATM fees when you use an ATM of a different bank to withdraw your money. Imagine how many people use the ATMs per day, and per month. And that is only one of their products, they have a lot.

[southerngentuk]

Well the description is a bit rough but very realistic when it comes to these things, I agree that banking is a place that helps society and serves people. But in fact, the benefits they get are much larger, thinking about the above relationship I think this is normal, because simply large banking groups accept more risks when working. Intermediaries help people have a stable control or distribution of the economy. I'm not denying that risk issues arise because it's not 100% avoidable either, and that's why many other financial channels emerge.

[Cryptmuster]

Taking a loan from a bank is like that, because you will always feel endless pressure before you pay it all off. So it's better to consider it before you start taking loans, because banks are also people who need customers who are able to rotate their money so they can benefit from their own customers. Now try to use bank services as wisely as possible so that you get comfortable without feeling too much pressure on yourself.

It depends on the character of the person, but a responsible person will always feel the pressure of debt, and will also need to worry about paying all payments on time. I do not like this, and even more so, when I see what high interest the bank wants to receive for this loan, I lose any desire to take money from the bank. Probably everyone understands this, but sometimes there are moments when this is the last chance for a person to find money.

[Minor Miner]

...
The main purpose why bank is needful is because we can't keep huge amount of money or treasure in our houses to prevent it from being stolen by a thief. We also needs the banks for our daily transactions either to receive or send money to someone in a distance from us.

The main purpose banks are useful is cause governments make them authoritative financial establishments.
There are many alternative assets one can use to huge amounts of money than stashing it away at a bank account to be eaten away by inflation as the printing machines work round the clock. One of such alternatives is Bitcoin.

For daily transactions, you do not need more than a couple hundred dollars at a time.

- Jay -

But the truth is that you, I and all of us are still using the bank every day, and it will never be lost or replaced. Bitcoin is an alternative, but it is highly volatile and relatively new, its future is still a question, meaning that holding all assets in bitcoin is also risky, it is also unsafe absolute. All have different risks and benefits, nothing is perfect.
After all, you invest in bitcoin for money, you do business for money, then banks like us, they need money to live, and if you are not satisfied with their service, you just ignore it and don't use them.

For me, there is no problem with both, I use the bank to save and don't put too much money in it. Bitcoin is used to invest and accumulate assets to avoid future inflation.

[gunhell16]

No matter what happens in business, once we become a customer, we are automatically a cash cow, which means that banks are not the only business that exists in this industry.

As simple as that, if there are no customers, the business is useless. Since the bank is a business, it's not surprising anymore, it depends on whether you trust the bank you put your money in them because that means you don't trust that you are the one holding the money to save so you entrust it to others so you don't spend money. That's what is seen in the aspect of the bank, the only unfair thing is that you entrusted them with your money that is not their money, what kind of requirements do they ask of us before we can get the money that we entrusted to them? That's why it's better to save bitcoin than to put money in the bank in my opinion.

[19Nov16]

Banks are indeed a problem at the moment, we are too dependent on banks so that when we deposit money there will be many rules, and if we want to take it then it takes a long process and time, if we borrow from banks and are late then large fines will be applied, but if we are on time or before due they just say thank you.

[Hyphen(-)]

Do you believe banks will continue to operate if they do not make a profit?
They make money in a variety of ways, as you mentioned in the OP.
I believe that the government receives too much revenue from banks and takes loans from them, which is why they always support them in collecting our money for their business and the sake of their loans, whereas if banks fail today, the government may overlook its citizens because I am sure that our big politicians and some of our government officials have large stakes in the banks, which will cause them not to fight for us when the need arises.

Banks are indeed a problem at the moment, we are too dependent on banks so that when we deposit money there will be many rules, and if we want to take it then it takes a long process and time, if we borrow from banks and are late then large fines will be applied, but if we are on time or before due they just say thank you.

Banks will only value you when you come to deposit money because they know you have come with money for them to move up their business; when you come to withdraw your own money, they will now be very strict by following different due processes, which are always annoying. For this reason, someone may prefer to keep his money at home to avoid all of these banks' withdrawal problems, whereas the wise will invest it in Bitcoin and be completely free of any third-party and government policies.

[Synchronice]

Not only banks but the whole system in this world works in a way to milk you.
Imagine, you work and half of your salary is gone into taxes. Additionally, inflation adds another tax to your salary and again your actual salary is still lower. And seems it's not enough for the government, everything you buy, every service you use, absolutely everything is taxed, this again deducts some % to your salary. And as a bonus, big companies have very high profit margins.
Finally, I would say that probably 70% of your salary is gone and taken by government, every 7 hours work out of ten is done for the government for free.

It's very sad how banks earn up to 3% from our transactions, they make money out of thin air. And bitcoin is not a deal if we have to convert bitcoin into USDs on exchanges, hope time will come when we will count things in bitcoin or in any other competitive altcoin.

[LastKiss]

That's how a bank works and that's why I'm using crypto right now not storing a lot of money in my bank but instead storing it in Bitcoin as an investment value and buying some real properties instead. But if I'm not using a bank I will get some trouble making transactions in my country since not a lot of people accept cryptocurrencies as a payment.

[Semar Mesem]

Banks are often detrimental to consumers, if we lose money without our knowledge and we want to complain then we won't be able to return it, it's time for us to leave the bank because they only use the money we keep in the bank to get big profits for them.

[Sayeds56]

Banks are often detrimental to consumers, if we lose money without our knowledge and we want to complain then we won't be able to return it, it's time for us to leave the bank because they only use the money we keep in the bank to get big profits for them.

It is true that depositors are the cash cows & banks use their funds to generate profits, but this is how banking business model works, and it enables them to provide various services to individuals and businesses. They also provide facilities of saving accounts, credit cards and fixed deposits which can benefit us if we use them wisely. Banks play crucial role for the economy, as they facilitate transactions and provide credit.

The main issue with current banking system is that money consistently loses its value despite earning interest on saving as banking system operates on fiat currencies which experience consistent depreciation due to rising inflation. Bitcoin is the best potential alternative to address issue of inflation as it has limited supply.

[lixer]

Banks are indeed a problem at the moment, we are too dependent on banks so that when we deposit money there will be many rules, and if we want to take it then it takes a long process and time, if we borrow from banks and are late then large fines will be applied, but if we are on time or before due they just say thank you.

To be honest, they are not considered a problem by a large, or the largest part of the human population, and that is because they fulfill the needs of almost everyone when it comes to managing, storing, or using their finances though it costs them money, they seem to have no other option but to use their services and products.

The process might be time-consuming, they might charge fees, and you may have to submit a whole lot of documents to get a simple thing done, but at the end of the day, they are the only ones that will do the work you need to be done, so we have no option other than to become cash cows for their business.

[Bitcoin2009]

Most of the bank owners are the richest people in the world, or if there is a rich person then he also has banks, this is because banks are managed professionally and always apply strict policies, banks run business with legal support so whatever the banks do it will be difficult to stop.

[andriarto]

Banks are indeed a problem at the moment, we are too dependent on banks so that when we deposit money there will be many rules, and if we want to take it then it takes a long process and time, if we borrow from banks and are late then large fines will be applied, but if we are on time or before due they just say thank you.

To be honest, they are not considered a problem by a large, or the largest part of the human population, and that is because they fulfill the needs of almost everyone when it comes to managing, storing, or using their finances though it costs them money, they seem to have no other option but to use their services and products.

The process might be time-consuming, they might charge fees, and you may have to submit a whole lot of documents to get a simple thing done, but at the end of the day, they are the only ones that will do the work you need to be done, so we have no option other than to become cash cows for their business.

even though we know the bank feels like a cash cow, but we cannot do what we want and of course we have to follow their rules, and we cannot be separated from the bank, especially if we are businessmen, of course there will be many transactions from our colleagues to expedite the business we have, but we can respond by knowing the nature of the bank. banks are not the best place to save, but we need banks to make money from our jobs, I think so

[carlisle1]

Most of the bank owners are the richest people in the world, or if there is a rich person then he also has banks, this is because banks are managed professionally and always apply strict policies, banks run business with legal support so whatever the banks do it will be difficult to stop.

They are well aware of what the rules were and they use it as an advantage to make more money with people's money who use
their services, Bank owners are business professionals that's for sure!

We can expect them to make more money just by providing services, two-way business where they are receiving and keeping your savings
while using it with their investment ventures.

Nothing we can do about being a cash cow as it was professionally and legally being done!

[bitgolden]

That's how a bank works and that's why I'm using crypto right now not storing a lot of money in my bank but instead storing it in Bitcoin as an investment value and buying some real properties instead. But if I'm not using a bank I will get some trouble making transactions in my country since not a lot of people accept cryptocurrencies as a payment.

I do agree that banks are still a requirement for many things unfortunately and that's true, there is nothing wrong with that and I could understand it. However, when it comes down to a situation where it is between crypto or fiat, I prefer crypto obviously and even compared to gold or real estate, my number one investment is always bitcoin, I love it more than anything else.

But that doesn't mean that I need other investments for other purposes sometimes, like I have some gold, and I have my own house as real estate investment because I rather not pay rent. Obviously all of that slashed nowadays because of some economic stuff, and I have nothing now, but that's how I do it.

[Similificator]

I mean, most of the people know this already. It's just that it's difficult for most of the people to go against the norm since mass adoption of bitcoin or any crypto currency hasn't been that huge yet. Which is why most of the people that are aware just use fiat and bank services for the sake of convenience and are already preparing themselves for the future when the crypto currency industry gets even more widely known all throughout the world. Most of these guys prepare by informing family and other important people around them while also learning and collecting as much good crypto as they can.

Still though, there are quite a lot of people who are already aware but still choose to ignore and do nothing about what they know and just take the opportunities that this industry has to offer not just for today but for the coming years as well for granted instead of taking advantage of them. Which is kind of sad in my opinion but oh well.

[leonair]

When we deposit our money in the bank, the bank lends our money to other customers and takes interest from it at a fixed percentage rate. But if we keep our money in the bank only as savings then the bank gives us only 1-2% APR. And if we keep it as FD then the bank gives us 5-6% interest and they cut income tax 10-15% from here.  And on the other hand banks provide loans to customers and charge interest ranging from 8-15%. And the bank deducts annual maintenance charges, debit/visa/master/credit card charges, sms charges and other charges from us. Banks are just being a middleman, doing business of billions of dollars yearly

Banks have lots of money through this method, more like compound interest. They build estates and businesses with people's money and live in well furnished houses while their cash cow stays in a bad neighborhood. Banks have nothing to lose in compound interest, but customers suffer inflation from the money invested on compound interest. Money invested into compound interest 20 years ago yields huge profits now, but when the buying power is converted, the customer is left with no profit; due to inflation. Even the money lent to business owners open's door to collateral, which they get if the business or person doesn't pay their debts. It's a platform with lots of properties gained through customer's money. I've heard of people who are not able to claim their father's money from the bank, what happens to the deceased person's money?

Banks most of the time help people by keeping thousands of crores of people's money safe under them and the customer can withdraw it whenever they want.  Also if one does FD then he is also given 5-7% interest so it is normal that bank will charge compound interest from the person to whom they lend because they don't enjoy this interest alone they give almost 50% to their FD holders. On the other hand, a bank has to collateral of Billion of doller the central bank.  And they incur a lot of expenses including staff salaries and various other maintenance costs. So I don't think a bank has  too many unfair charges

[BenCodie]

Here’s a look at the ways that banks and credit unions make money, often off your money, no less:

1. Deposits: Banks know how to leverage money in genius ways. When you deposit money into your savings account or certificates of deposit, your bank will pay interest as an incentive for you to park your cash there. That’s because banks need your money to make loans. Your cash isn’t really physically in your account, waiting — your bank is making lucrative deals lending it to other customers and businesses until you need it.

Banks want you to trust them enough to keep your money with them in the promise to safeguard it for you and would even offer you an interest to keep it, while they use your money to make even more money.
They convince you that you are protected by fractional reserves for any incidence that occurs, but banks can still fail to balance their sheets between your money that they took in and the amount they lent out, leading to a bank failure:

The most common cause of bank failure occurs when the value of the bank’s assets falls to below the market value of the bank’s liabilities, which are the bank's obligations to creditors and depositors. This might happen because the bank loses too much on its investments. It’s not always possible to predict when a bank will fail.

In the event of this they would bail out the banks with more money, making you poorer by increasing the money in circulation, until the economy can take no more.

MSN: "Banks know how to leverage money in genius ways"? LOL!

This genius way is called Fractional Reserve Banking. The theory that for every $1 your bank receives, you can lend out $10 more as long as you keep that $1 in the vault. Lets scale that figure up...
For every $1,000,000 your bank receives in deposits, you can do business with $10,000,000
Lets scale it up again...
For every $100,000,000,000 ($100 billion) you can lend out $1 trillion.

It's not rocket science. If you lend out the same money 10 times, you only need one person to repay in order to break even. For everyone that pays after that, you are literally multiplying money!

At least on paper...because the 10x that was lent was not really money in circulation to begin with. It's fugazi (made up!)

A better way of explaining it, from SoFi (Go here to read more)

The Fractional Reserve Multiplier Equation

Although it can’t be calculated precisely, the impacts of fractional reserve banking on the economy can be estimated using what is called the multiplier equation. This equation helps figure out how much money can potentially be created from bank lending.

The equation is:

Initial Deposit x 1/Reserve Requirement

For example, if a bank has $500 million in total assets, it is required to hold 10% in reserves, which is $50 million. Using the multiplier equation, the calculation would be:

$500 million x 1/10% = $5 billion

This means that $5 billion can potentially be created in the economy through the system of fractional reserve banking. This is different from printing new money, and is simply an estimate of the impacts of FRB.

[coinerer]

When we deposit our money in the bank, the bank lends our money to other customers and takes interest from it at a fixed percentage rate. But if we keep our money in the bank only as savings then the bank gives us only 1-2% APR. And if we keep it as FD then the bank gives us 5-6% interest and they cut income tax 10-15% from here.  And on the other hand banks provide loans to customers and charge interest ranging from 8-15%. And the bank deducts annual maintenance charges, debit/visa/master/credit card charges, sms charges and other charges from us. Banks are just being a middleman, doing business of billions of dollars yearly

Banks have lots of money through this method, more like compound interest. They build estates and businesses with people's money and live in well furnished houses while their cash cow stays in a bad neighborhood. Banks have nothing to lose in compound interest, but customers suffer inflation from the money invested on compound interest. Money invested into compound interest 20 years ago yields huge profits now, but when the buying power is converted, the customer is left with no profit; due to inflation. Even the money lent to business owners open's door to collateral, which they get if the business or person doesn't pay their debts. It's a platform with lots of properties gained through customer's money. I've heard of people who are not able to claim their father's money from the bank, what happens to the deceased person's money?

Banks most of the time help people by keeping thousands of crores of people's money safe under them and the customer can withdraw it whenever they want.  Also if one does FD then he is also given 5-7% interest so it is normal that bank will charge compound interest from the person to whom they lend because they don't enjoy this interest alone they give almost 50% to their FD holders. On the other hand, a bank has to collateral of Billion of doller the central bank.  And they incur a lot of expenses including staff salaries and various other maintenance costs. So I don't think a bank has  too many unfair charges

Yes you may be right but running a bank is as difficult as it gets!  It is also easy to earn huge amount of money from there. Because the banks spend their own money only to keep collateral in the central bank.  And all other expenses are paid from the customer's  deposit.  So in this case the bank does not have to do business with their own money. And even though banks pay some percent interest to their customers, they earn huge profits. Again they often charge unfair charges from their customers sometime. so You can't say that banks never charge sometime unfair from the customer's 

[un_rank]

This genius way is called Fractional Reserve Banking. The theory that for every $1 your bank receives, you can lend out $10 more as long as you keep that $1 in the vault. Lets scale that figure up...
For every $1,000,000 your bank receives in deposits, you can do business with $10,000,000
Lets scale it up again...
For every $100,000,000,000 ($100 billion) you can lend out $1 trillion.

To be clear, for every $1,000,000 you bank receives in deposits, they are required to keep 10% of it in reserves and have $900,000 to play with in loans to other customers. The banks can recreate this with all customers creating loan amounts from thin air while the balance sheet of the customers remain unchanged.

Some economic boom could create a situation where more people are borrowing than they are depositing, any change in this would create a bank run and their sheets would be unbalanced like it was in 2008, and then they get bailed out with more money from thin air.

- Jay -

[puloweh555]

Banks are financial institutions that play an important role in allocating funds from parties who have excess funds to parties who need funds, as well as facilitating financial transactions between these parties. Banks benefit from the difference between the interest they pay customers who save and the interest they receive from those who borrow money.

Although banks benefit from this interest difference, they also bear the risk of lending and managing their customers' funds. Banks also have a responsibility to comply with regulations set by regulators, such as central banks, to ensure the security and stability of the financial system.

This is the same as loan shark practices carried out by individuals who are not registered and are not regulated by financial authorities, which are often against the law and can cause losses to borrowers. Moneylenders often charge unjustly high interest rates, and may use violence or threats to force borrowers to pay back their money.

Although banks and moneylenders both benefit from interest, banks have regulations and responsibilities to maintain the security and stability of the financial system, while moneylenders often engage in illegal and unfair practices. Therefore, even though we do not like Business Bank because as a cash cow, we are forced to use it. But between the two it is better to use official banking services regulated by financial authorities to be protected by the government.