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 -

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[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.