Banking is the system that is opted by each and every person. Today even the students also have their own bank account and the main reason behind that is the students who live far from their parents get their money when their parents deposit money in their bank account. This system saves the money from getting stolen and the student gets money easily. Banks are considered as the smartest and the reason is that they have lots and lots of terms and conditions which no one like to read and so in order to save time people use to sign in the documents. There are many points in the terms that may sometime cut a good amount from your account as fine or some kind of charges.
Usually banks don’t have any money in order to run their business and so they borrow money from some other banks. As they get money, they establish their bank with lots of decorations so that the people get attracted towards them. Then they start getting more and more customers in order to deposit money in their bank and they offer many benefits like internet banking, loans, lockers etc. and they also make people greedy for the interest rates that they are going to provide. As they get good amount of deposit, they start lending money to people who are needy on higher interest rates. San Francisco banking is one for the best.
We all know that bank lend money to the needy people on higher interest rates. But how do they get money? They get money from the people who save money in the bank and in return these banks provide us yearly interest rates. These interest rates are usually lower than the interest rates they charge to the people. So whatever is the difference amount is the profit of the bank.
Banks not only earn from loans but they have two types of accounts one is saving and other is current. For the saving account bank provide interest rates but they have a condition to maintain certain amount of balance. That means you cannot go lower on that money or else they will charge you a fine, so this is the first earning. When it comes to current account, they don’t pay any interest rates but they provide a facility to withdraw money as many times we want, so this is the second earning. There are many other sources for income for the banks.